Lithium Iron Phosphate Prices Double in a Year, Driving Up EV Costs

Lithium iron phosphate (LFP), a dominant cathode material for lithium-ion batteries, has seen its price nearly double over the past year—rising from approximately RMB 30,000 per ton to around RMB 60,000 per ton. This surge is primarily driven by soaring prices of upstream raw materials, particularly battery-grade lithium carbonate, whose spot price has climbed to about RMB 205,000 per ton—up more than 250% from its low of RMB 58,000 per ton in June 2025. Robust downstream demand has further tightened the supply-demand balance. In Q1 2026, domestic LFP shipments reached 1.23 million tons, marking a nearly 60% year-over-year increase. In April 2026, LFP battery installations in vehicles hit 50.8 GWh, accounting for 81.5% of total battery installations—a record high. As battery manufacturers ramp up procurement to secure production, cost pressures are gradually being passed on to the vehicle market. From January to March 2026, the average selling price of passenger vehicles in China rose by RMB 15,000, RMB 15,000, and RMB 7,000 year-over-year, respectively, reflecting a clear upward pricing trend for new energy vehicles (NEVs). Several automakers have already begun raising prices on select models.