Behind BYD's new batteries: this lithium battery material supply is tight

On the evening of March 5th, Wang Chuanfu, Chairman and President of BYD, highlighted at the “BYD Second Generation Blade Battery and Fast Charging Technology Launch Event” that the company’s new second-generation blade battery can be fully charged in 5 minutes and topped off in 9 minutes. Specifically, charging from 10% to 70% takes only 5 minutes, and from 10% to 97% takes just 9 minutes. Wang also introduced breakthroughs in the second-generation blade battery’s low-temperature charging performance.

Market opinions suggest that this indicates BYD has broken through new technological boundaries for lithium iron phosphate batteries.

Shanghai Securities Journal learned from the lithium battery industry chain that the second-generation blade battery uses fourth-generation lithium iron phosphate materials. As the latest mass-producible material in the lithium iron phosphate industry, the fourth-generation lithium iron phosphate significantly supports key performance indicators such as energy density, rate performance (related to fast charging), and low-temperature performance.

An executive from a listed lithium iron phosphate company analyzed to Shanghai Securities Journal that by 2026, capable battery companies are expected to continue switching to fourth-generation lithium iron phosphate materials. This material will mainly be used in relatively high-end vehicle models. In contrast to increasing demand, the current capacity of fourth-generation lithium iron phosphate materials is less than 2 million tons, leading to a noticeable shortage. Therefore, in 2026, there is expected to be a phased supply-demand imbalance for this material.

The executive stated that although many companies are expanding their fourth-generation production lines, it is expected that capacity will be gradually released only by the fourth quarter of 2026. Before then, there will be a period of early opportunities for capacity-capable companies. “This year, the profitability of the cathode material industry depends on product structure; if the shipment volume of fourth-generation products is high, profitability could be better,” he said.

SMM (Shanghai Metals Market) also made similar predictions regarding the lithium iron phosphate industry outlook and corporate profitability in 2026.

SMM’s analysis indicates that in 2025, only about 4-6 companies nationwide will achieve stable production and mass shipment of fourth-generation lithium iron phosphate. In 2025, fourth-generation products account for approximately 10.3% of all lithium iron phosphate products. By 2026, to meet the demands of large energy storage cells and high-energy-density power cells, the output of fourth-generation lithium iron phosphate is expected to double, with market share rising to 16%-20%. More than 10 companies will achieve mass production. In 2026, the total annual demand for fourth-generation materials by cell manufacturers is about 1.5 million tons, but actual supply is expected to be only 1.0-1.2 million tons, creating a tight supply-demand situation that will support strong bargaining power.

SMM believes that fourth-generation products will be one of the key factors supporting corporate profits. In 2026, the lithium iron phosphate industry will develop along the path of “high-end scarcity for profit, low-end oversupply for clearance.” Whether the overall industry profit can turn positive will depend on whether the premium for high-end fourth-generation materials can offset losses in the low-end market, and whether the new business model of “raw material + processing fee” separation settlement can be widely adopted and effectively pass on cost pressures.

Regarding listed companies, Hunan Yune has achieved mass supply of its fourth-generation lithium iron phosphate products. The company expects a year-on-year net profit increase of 93.75% to 135.87% for 2025. The profit growth is mainly driven by the rapid development of the new energy vehicle and energy storage markets, which has increased demand for lithium battery cathode materials, coupled with a structural supply shortage. The company’s sales of phosphate cathode materials have surged, especially as its new products precisely meet the downstream market’s needs for higher energy density, faster charging, and larger cell capacity upgrades.

Longpan Technology states that it has successfully developed fourth-generation products with single and double sintering processes and has achieved mass supply to downstream customers. The company analyzes that the high-voltage dense fourth-generation products feature both high energy density and high charging rate. Since 2025, industry demand for high-voltage dense lithium iron phosphate cathode materials has rapidly increased, showing a supply shortage. In the future, the industry will continue to improve the performance of lithium iron phosphate cathode materials in terms of higher density, faster charging, and wider temperature adaptability.

Anda Technology’s latest high-density product (fourth-generation lithium iron phosphate) uses a double sintering process. Customer validation is underway, with some shipments already made, and shipment volume expected to gradually increase. To meet the demand for higher density and better electrical performance, the company’s old factory’s 40,000-ton/year lithium iron phosphate project is undergoing technical upgrades, expected to be completed in the first quarter of 2026.

Furun Precision states that high-density, high-voltage lithium iron phosphate materials (fourth-generation) balance high energy density with fast charging performance, further expanding their share in the cathode material market. The company is accelerating its layout in the super-fast charging market, with high-voltage dense lithium iron phosphate 4C supercharging products entering the high-end passenger vehicle market due to their performance advantages. In February 2026, Furun Precision announced an investment and share expansion in its subsidiary Jiangxi Shenghua with CATL. After years of accumulation and continuous iteration, Jiangxi Shenghua’s high-density, high-voltage lithium iron phosphate products now possess technological and performance advantages.

(Source: Shanghai Securities Journal)