To date, technological advances have significantly elevated energy density in EV batteries, expanding vehicle driving range while driving down purchase and total ownership costs to parity with conventional internal combustion engine (ICE) vehicles. Multiple governments have introduced subsidies and tax credits for EV buyers and manufacturers alike, running parallel to structured phase-out roadmaps for ICE vehicles. Meanwhile, expanding battery pack capacities and the accelerating rollout of public charging infrastructure continue to alleviate range anxiety and driver concerns regarding battery depletion prior to reaching charging stations.
These factors have sparked tremendous global growth in electric vehicle sales. Recent industry projections indicate that global EV sales will reach 18 million units by 2025, surging fourfold over a 5-year period compared to 2.3 million units in 2020. By 2045, battery electric vehicle sales are projected to reach 65 million units annually, accounting for two-thirds of total light-duty vehicles worldwide.
The rapid worldwide adoption of electric vehicles over the next two decades will be intrinsically tied to the ascent of lithium iron phosphate (LFP) battery chemistry. On a complementary scale, lithium manganese iron phosphate (LMFP) batteries will also witness growing adoption. In 2020, LFP and LMFP batteries accounted for only about 15% of the global EV market. Market intelligence firms project their market share will climb to 33% by 2025 and 37% by 2035.
Simultaneously, surging demand for LFP batteries will directly drive global demand for purified wet-process and thermal phosphoric acid (PPA). Market research consultancy CRU Group forecasts that the size of the global purified phosphoric acid industry will double over the next 20 years.
According to CRU, if China maintains its dominance over global LFP cathode active materials (CAM) and iron phosphate precursor manufacturing, LFP-driven purified phosphoric acid demand in North America and Europe will only increase by a modest 4% collectively by 2045. In that scenario, both regions would remain reliant on importing finished LFP cathodes from China to supply their domestic EV gigafactories. Consequently, China would continue as the paramount global supplier of LFP cathode materials, and its domestic purified phosphoric acid market size would more than double (110%) by 2045.
Conversely, if North America and Europe localize their domestic supply chains for LFP cathode and iron phosphate production rather than depending on imports from China, their local demand for purified phosphoric acid will surge substantially. Under localized supply chains, purified phosphoric acid demand in North America will surge by 60% by 2045, while European demand would nearly double (up 90%).
Overall on a global scale, whether China continues to dominate LFP cathode and iron phosphate manufacturing or other key regions successfully establish domestic self-sufficiency, long-term global demand for purified phosphoric acid will far outpace existing operational capacity, primarily propelled by the explosive growth of the LFP battery sector.
Fundamentally, meeting projected LFP battery demand will require global purified phosphoric acid capacity to expand by nearly twofold (95%) by 2045. In higher EV adoption upside scenarios, global purified phosphoric acid nameplate capacity may need to expand by up to 120% relative to current levels.
