Analysis of the Impact of Lithium Iron Phosphate (LFP) Technology Route Transformation on CATL

Based on collected data and market information, I will systematically analyze the impact of the lithium iron phosphate (LFP) technology route transformation on CATL.

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The market competition pattern between lithium iron phosphate (LFP) batteries and ternary lithium batteries has fundamentally reversed after 2020. According to the latest data, domestic power battery installed capacity reached 93.5 GWh in November 2025, of which

, while ternary lithium batteries accounted for approximately 20% [1]. This transformation is mainly driven by the following factors:

Driving Factor	Specific Performance
Cost Advantage	Cathode material does not contain precious metals such as cobalt and nickel, resulting in lower raw material costs and smaller price fluctuations
Safety Performance	LFP material has better thermal stability, leading to higher battery system safety
Technological Breakthroughs	Technologies such as CTP (Cell to Pack) packaging and blade batteries have significantly improved energy density

The industry is currently in a rapid iteration period of

(4th generation product, powder compaction density ≥2.6g/cm³). This technology can:

• Increase active material content in the same volume
• Improve cell energy density
• Enhance battery range
• Reduce comprehensive costs

The

launched by CATL in 2023 is a landmark breakthrough in this technical field, achieving the capability of “10 minutes of charging for 400 km of range” and pushing LFP battery technology to a new peak [3].

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According to the latest data, CATL continues to maintain a leading position in the power battery sector:

Battery Type	Installed Capacity in November 2025	Market Share	Month-on-Month Change
Ternary Lithium Battery	12.78 GWh	70.24%	-2.55%
Lithium Iron Phosphate Battery	28.09 GWh	37.31%	Remains First

From January to November, CATL’s total installed capacity reached 287.68 GWh, accounting for 42.92% of the market, continuing to rank first in the industry [1].

CATL has the following core advantages in the LFP field:

• Shenxing Series Batteries
  : Focus of market promotion in 2025, targeting to capture half of LFP battery shipments
• Shenxing PLUS
  : Achieves 1,000 km range, 4C rate fast charging, and 205Wh/kg energy density [2]

• Signed a 1.3231 million-ton supply agreement with Wanrun New Energy in May 2025
• Signed a 3.05 million-ton procurement agreement with Ronbay Technology in January 2026 (total value exceeding RMB 120 billion) [4]
• Invested RMB 3.175 billion in Fuling Precision Industry in a strategic investment, securing a 3 million-ton LFP procurement commitment [5]

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The mainstreaming trend of LFP has brought greater market opportunities for CATL:

• Global cumulative LFP production reached 2.6616 million tons from January to September 2025, a year-on-year increase of over 60% [4]
• With the booming development of the new energy vehicle market, demand in power and energy storage sectors continues to grow

CATL has successfully seized the high-end LFP market through the

, achieving:

• Upgrade from cost competition to technological competition
• Penetration of LFP in high-end models (such as high-end energy storage and power sectors)
• Construction of differentiated competitive barriers

Through signing long-term agreements with multiple cathode material manufacturers, CATL has achieved:

• Supply Chain Stability Guarantee
  : Locked in core raw material supply for the next 6 years
• Price Negotiation Power
  : Maintained bargaining advantages over upstream suppliers
• Collaborative Technological Iteration
  : Jointly promoted high compaction product upgrades with suppliers [5]

Although CATL still ranks first in the LFP sector, its

, reflecting a more competitive environment. BYD has unique advantages in the LFP field due to the synergy between vehicle manufacturing and battery production [1].

At the end of 2025, LFP cathode manufacturers collectively suspended production for maintenance, pushing processing fees up by approximately RMB 1,000 per ton [4]. CATL is attempting to break the existing balance and maintain control by introducing new suppliers such as Ronbay Technology.

Competitors are catching up significantly:

• BYD’s blade battery continues to iterate
• CALB has gained significant market share through technological innovation
• Sunwoda has completed the development of 4C LFP batteries [2]

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Indicator	Value	Evaluation
Price-to-Earnings Ratio (P/E)	24.88x	Reasonable Range
Price-to-Book Ratio (P/B)	5.05x	Moderate
Return on Equity (ROE)	22.84%	Excellent
Net Profit Margin	16.53%	Stable
Current Ratio	1.68	Financially Healthy

The company maintains a conservative financial stance, with a high depreciation/capital expenditure ratio, indicating that profitability still has room for improvement as investments gradually mature. The debt risk rating is

[0].

Quarter	EPS (USD)	Revenue (Billion USD)	Revenue Deviation from Expectations
Q1 2025	3.19	84.70	-
Q2 2025	3.63	94.18	-
Q3 2025	4.10	104.19	-11.59%
Q4 2024	3.51	102.97	-

Q3 2025 revenue fell short of market expectations by 11.59%, but earnings per share exceeded expectations by 0.49%, showing certain profit resilience [0].

Indicator	Value
Current Stock Price	$349.60
52-Week Range	$209.11 - $424.36
6-Month Gain	+28.91%
1-Year Gain	+31.67%
Beta Coefficient	0.83

The stock is currently in a sideways consolidation phase, with technical indicators showing that KDJ and RSI are in the oversold zone. Short-term trading range reference: Support Level $344.83, Resistance Level $365.95 [0].

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Time Node	Expected Changes
Short-Term (2025-2026)	High compaction density LFP becomes mainstream, CATL’s Shenxing series accounts for over 50% of shipments
Mid-Term (2027-2028)	All-solid-state batteries begin industrialization, ternary lithium batteries recover competitiveness in the high-end market
Long-Term (2030+)	Fields such as embodied intelligent robots and eVTOL provide new growth points for ternary lithium batteries

• Continue to increase R&D investment in the Shenxing series to maintain technological leadership
• Deepen strategic cooperation with suppliers such as Ronbay Technology and Fuling Precision Industry
• Accelerate overseas market layout (cooperating with Stellantis to supply LFP batteries to Europe)

• Maintain technical reserves for ternary lithium batteries (still accounting for 70.24% of installed capacity in November)
• Monitor the industrialization progress of all-solid-state batteries
• Expand diversified application scenarios such as energy storage

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The impact of the LFP technology route transformation on CATL is generally

:

1. Market Dimension
   : The mainstreaming of LFP has expanded the target market scale for CATL, and its technological advantages (Shenxing series) are expected to be converted into share growth

2. Profit Dimension
   : High-end LFP products have stronger premium capabilities, which help improve comprehensive gross profit margin

3. Competition Dimension
   : Although facing a more competitive environment, CATL’s technological accumulation and supply chain layout form a strong moat

4. Valuation Dimension
   : The current 24.88x P/E ratio is in a reasonable range. Considering the industry growth prospects and the company’s leading position, the valuation is attractive

: As the absolute leader in the power battery industry, CATL is in a favorable position amid the LFP technology transformation. It is recommended to pay attention to the promotion progress of its Shenxing series batteries, changes in LFP market share, and R&D progress of all-solid-state batteries.

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[1] Sohu Auto - “November Domestic Power Battery Installed Capacity Reaches 93.5GWh, LFP Accounts for 80%” (https://www.sohu.com/a/968516694_122189)

[2] IT Home - “Latest Developments in Lithium Iron Phosphate” (https://www.ithome.com/tags/磷酸铁锂/)

[3] Sina Finance - “Power Battery Technology Route Competition Remains Fierce” (https://cj.sina.com.cn/articles/view/7880068201/1d5b04c6901901qh86)

[4] Phoenix Net Finance - “CATL’s Counterattack Frustrated? Ronbay Technology’s Over RMB 120 Billion Large Order Under Inquiry” (https://i.ifeng.com/c/8pw8c5bBt6w)

[5] Securities Times - “Subsidiary Plans to Invest in 70,000 Tons/Year High Compaction Density LFP Project” (https://www.stcn.com/article/detail/3597927.html)

[0] Jinling AI Financial Database (Market Data, Financial Analysis, Technical Indicators)