The secondary battery material company L&F is recovering its performance thanks to the effect of Tesla's new cars, and is accelerating its efforts to secure new growth engines including lithium iron phosphate (LFP). The plan is to target the mid-to-low priced electric vehicle (EV) and energy storage system (ESS) markets by ramping up production of both its core high-nickel cathode materials and LFP cathode materials.
According to industry sources on the 3rd, L&F has recently begun securing funding to promote its LFP business. The company accepted subscriptions for convertible bonds from existing shareholders until the day before, and the remaining amount will be offered to general investors in a public offering. The 300 billion won raised through this bond issuance is intended for investments in a separate entity for LFP cathode materials.
L&F officially entered the market by establishing a subsidiary, L&F Plus Co., Ltd., dedicated to LFP cathode materials in July. The company plans to produce up to 60,000 tons of LFP cathode materials annually, and is currently supplying samples to clients from its pilot production line. The mass production timeline has been advanced from the end of next year to the third quarter of next year.
Domestic battery material companies that have focused on nickel-cobalt-manganese (NCM) batteries are increasingly entering the LFP business development. While LFP batteries have high stability and price competitiveness, they have the disadvantage of lower energy density, which affects efficiency. However, recent technological developments have improved performance, leading to an increase in adoption primarily in mid-to-low priced electric vehicles. The demand in the ESS market is also on the rise.
L&F is the first company outside China to pursue large-scale production of LFP cathode materials, targeting to secure competitiveness in a market dominated by China. It has signed supply contracts with global battery corporations such as SK On and Our Next Energy, and aims for additional orders, focusing on the North American ESS market.
As expectations for the impact of Tesla's new cars grow in the second half of this year, the addition of the LFP business is anticipated to further boost performance growth. Tesla, which accounts for about 80% of L&F's sales, began the delivery of the Model Y 'Juniper' from the second quarter, and sales of L&F's cathode materials increased by 55% compared to the previous quarter. Similar trends are expected to continue into the third quarter.
According to the consensus from financial data firm FnGuide, L&F's sales are expected to increase by 89% year-on-year to 664.9 billion won in the third quarter of this year, with operating profit projected at 4.8 billion won, indicating a return to profitability. In the second quarter, sales decreased by 6.3% year-on-year to 520.1 billion won, with an operating loss of 121.2 billion won, marking seven consecutive quarters of losses since the fourth quarter of 2023.