(Yicai Global) March 28 -- Chinese battery material suppliers are expanding production so the tight supply that has been driving price hikes should ease, according to the chief of Volkswagen-backed Gotion High-Tech.

The annual supply of lithium iron phosphate will rise to nearly 5.5 million tons by 2025 based on plans announced by the top 10 suppliers, Chairman Li Zhen said during the eighth China Electric Vehicle 100 Forum.

Moreover, the supply of ternary cathode materials will increase to almost 2.7 million tons in three-and-a-half years, he added. That of anode materials will reach 3.2 million tons.

Battery manufacturers have been expanding production in recent years, causing surges in raw material and electric vehicle prices. Lithium carbonate cost CNY500,000 (USD78,466) per ton in China late last year, jumping 10 times from the beginning of 2021, according to public data.

Li predicts that lithium iron phosphate will become more popular than ternary cathode materials with a 60:40 ratio. The annual demand for the former could be two million tons in 2025 while the latter may be 1.3 million ton. By 2030, the respective numbers could rise to four million tons and 2.6 million tons.

The annual demand for lithium iron phosphate raw materials should grow to a scale of millions of tons by 2025 whereas the nation’s potential supply capacity could go as high as the scale of hundreds of millions of tons, according to Li. 

On the other hand, while the ternary cathode materials contains nickel and cobalt compound, which are both heavily dependent on import, the processing technology improvement as well as the use of alternative materials should allow Chinese battery manufacturers to reduce their reliance on such imports, according to the battery developer chief.

The businessman gave a concrete example of the expected growth. China's annual demand for lithium carbonate is expected to be around 600,000 tons by 2025. However, eastern China's lithium-rich Yichun alone will be able to produce 500,000 tons of the precursor material per year by then, according to Li.

Editors: Tang Shihua, Emmi Laine, Xiao Yi