Economic Observer reporter Wang Yajie

On May 7, 2026, at the end of the Beijing International Auto Show, the SAIC Volkswagen Tiguan L ePro was officially unveiled. The model is equipped with a 22kWh manganese iron phosphate (LMFP) and ternary lithium hybrid battery solution, becoming a landmark move in the joint venture brand's public landing of manganese iron phosphate technology route.

On May 3rd, BYD's Tengshi Z9GT was the first to be delivered. The model comes standard with a second-generation blade battery, which uses a manganese iron lithium phosphate composite positive electrode and a silicon carbon negative electrode system. The CLTC comprehensive range has exceeded 1000 kilometers.

A month ahead, domestic lithium battery positive electrode material enterprise Hunan Yuneng has completed a targeted issuance of 4.788 billion yuan in fundraising. The core purpose of this fundraising is to invest in a new project with an annual output of 320000 tons of lithium manganese iron phosphate.

At the auto show, new cars will be launched, high-end models will be delivered in bulk, and material companies will increase their capital significantly. By the turn of spring and summer in 2026, lithium manganese iron phosphate is no longer just a concept discussed in the industry's technical discussions, but has entered a large-scale landing cycle of car companies' loading, production capacity, and resource allocation.

Cost accounting of car companies

Choosing batteries now is not about technical beauty pageants, but about solving a balance equation between cost and performance, "Chen Zongqi, who has participated in the research and development of power systems for independent brand car companies, told Economic Observer reporters that his company has fully switched to LMFP solutions for the 2026 new car model. At the two ends of this equation, one end is lithium iron phosphate (LFP) batteries, which, after years of expansion, have broken through the cost lines of most companies; On the other hand, ternary lithium batteries have high energy density, but the high volatility of cobalt and nickel prices keeps their costs high.

According to industry organization GGII, as of May 2026, the unit cost of mainstream LMFP batteries is approximately 0.45 yuan/watt hour to 0.5 yuan/watt hour, which is about 30% lower than ternary batteries and only about 10% higher than LFP batteries. However, in terms of performance, the energy density of LMFP can reach 190Wh/kg to 210Wh/kg (watt hours per kilogram), directly approaching the lower limit of ternary batteries.

Using a 10% cost increase in exchange for a 15% to 20% range improvement while retaining safety comparable to lithium iron phosphate is highly lethal in the mainstream price range of 150000 to 300000 yuan, "Chen Zongqi analyzed. This precisely captures the biggest pain point of the consumer side, which is range anxiety, without causing the BOM (Bill of Materials) cost of car companies to get out of control.

If we don't produce lithium manganese iron phosphate, we may even lose next year's customers, "said a sales vice president of a positive electrode material company to an Economic Observer reporter. The crisis he referred to came from the collapsing price cuts in the lithium iron phosphate market. By 2025, the average gross profit margin of the domestic LFP material industry has fallen to single digits, causing a large number of small and medium-sized enterprises to suffer losses and the industry to clear up severely. For material companies, LMFP is a key variable for breaking out of homogeneous competition, locking in mid to high end customers, and repairing profit and loss statements.

So, a multi billion level production capacity arms race began in the first half of 2026.

Economic Observer reporters found that in April of this year, Hunan Yuneng announced the completion of private placement, with nearly 4.8 billion yuan of funds to sprint forward. Among them, 2.8 billion yuan has been specifically invested in the annual production of 320000 tons of LMFP project, which is currently the largest single investment in the industry. Yuneng's logic is clear, using its scale advantage to replicate the cost control capability of LFP onto LMFP. Earlier deployed German company Nano has revealed that its first generation LMFP product has been mass-produced and is currently being validated by leading car manufacturers for its second generation of higher performance products.

When everyone's attention is focused on the expansion of production capacity figures, a more hidden main line is lurking deep in the mines upstream of the industrial chain, which is "manganese".

When 'manganese' becomes the new oil

The core change of LMFP compared to LFP is the incorporation of manganese element into the positive electrode material. This seemingly minor formula change is changing the pattern of non-ferrous metal resources that have been solidified for many years.

We used to be a supplier of scrap materials for steel plants. Since the end of last year, we have been lining up with battery material customers to discuss long-term orders and lock production capacity, "said the sales director of a large domestic high-purity manganese sulfate production enterprise to the Economic Observer reporter. Battery grade high-purity manganese sulfate is the core precursor for preparing LMFP, and its supply is shifting from a buyer's market to a seller's market.

With the ongoing power crisis in South Africa leading to a cumulative increase in electricity prices, mining costs have skyrocketed, and Gabon's railway capacity bottleneck has posed new risks of contraction to global manganese ore supply.

The scissors gap between limited supply and surging demand has allowed players who control upstream resources to occupy the high ground of profit distribution in this LMFP feast. Enterprises such as Red Star Development and Xiangtan Electric, which have the ability to mass produce high-purity manganese sulfate, have shown promising performance elasticity in the market.

This resource anxiety is also driving midstream material factories to integrate their layout backwards. If we don't have a stable source of manganese, our tens of billions of yuan investment is like being choked, "said the sales vice president of the aforementioned positive electrode material company. The company has already started signing long-term agreements with upstream manganese ore enterprises for three to five years, and even making strategic investments in overseas mines to ensure resource self-sufficiency.

He said, "The competition in the future is not simply about who has the largest production capacity and better technology, but about the iron triangle closed-loop capability of 'resources+technology+customers'." He predicted that by 2027, with the concentrated release of planned production capacity, low-end LMFP production capacity lacking resource guarantees will repeat the mistakes of LFP and fall into a fierce price war. Only integrated leaders like German Nanotechnology, Hunan Yuneng, and BYD can survive.

From a more macro perspective, the rise of LMFP is not only a technological route change within the lithium battery industry, but also provides a window for traditional non-ferrous giants in China to "change lanes and overtake". These enterprises are trying to break through the value chain from "cyclical mining and metallurgy" to "growth materials" by entering new energy materials such as manganese iron phosphate and iron phosphate, so as to free their valuation from the strong cyclical constraints of the traditional non-ferrous metal industry.

Of course, LMFP is not a panacea. The mixed use of it with ternary materials is still the mainstream, and there is still room for optimization in terms of conductivity, compaction density, and other aspects for pure use solutions. The rapid iteration of leading technologies such as M3P and blade batteries in related enterprises also means that the technology window period is fleeting.