Why is the LFP cathode supply expanding even in an oversupplied market?

Low costs, a good safety record and policy support have increased demand for lithium iron phosphate (LFP) cathodes, supporting new investments and expansions. Yet, it is the wild expansion of LFP cathode production that is seemingly the reason for the current market surplus. However, raw material supply, unclear construction phases and technology development are limiting the real output for LFP cathodes, especially the high-quality products. Therefore, for the LFP cathode market, there is an oversupply in capacity while the actual production is lower than expected. We examine the reasons behind the expansions, highlight the underlying driving forces behind the surplus, and reveal why the surplus will not be as problematic as people think.