CATL Secures LFP Supply from Shenghua to Boost Battery Production

LFP

CATL Signs Strategic LFP Supply Agreement

China’s largest battery manufacturer, CATL, has entered into a major supply agreement with Jiangxi Shenghua New Material to secure long-term lithium iron phosphate (LFP) cathode materials. The deal involves a 500mn yuan ($69.6mn) advance payment to help finance Shenghua’s construction of two new LFP production facilities. These will include a 160,000 t/yr plant in Yichun, Jiangxi, and a 200,000 t/yr plant in Sichuan, significantly expanding the company’s capacity.

Priority Supply for CATL Through 2029

Under the agreement, Shenghua will prioritize all designed capacity to meet CATL’s specifications between 2025 and 2029. CATL has committed to purchasing at least 80% of Shenghua’s annual production during this period. Shenghua’s LFP output has surged from 42,159t in 2023 to 128,240t in 2024, with sales climbing at a similar pace. The company currently supplies major battery producers such as CATL, Svolt Energy Technology, and Henan Lithium Power Battery Technology.

Strengthening China’s EV and Energy Storage Market

LFP batteries accounted for nearly half of the global EV battery market in 2024, with an even greater share in China due to their cost advantages and safety profile. As geopolitical tensions and US tariffs limit export opportunities, Chinese manufacturers are intensifying efforts to stimulate domestic demand through new energy vehicle (NEV) and energy storage system (ESS) expansion. This strategic partnership positions CATL to maintain secure material supply and enhance competitiveness in both sectors.

The Metalnomist Commentary

This deal underscores the strategic importance of upstream material control in the rapidly growing EV and ESS sectors. By locking in long-term LFP supply, CATL is mitigating raw material risk while supporting China’s domestic manufacturing resilience. In a market facing geopolitical pressure, vertical integration remains a key competitive advantage.