OEMs may struggle to build cheap LFP batteries – report

Replicating Chinese economies of scale may prove tough for US and EU supply chains

OEMs may struggle to build cheap LFP batteries – report
Catl has invested heavily in LFP batteries

US and European OEMs may struggle to replicate Chinese manufacturers' success in making cheaper lithium iron phosphate (LFP) batteries, according to a report from analyst Battery Materials Review.

Chinese firms such as Catl have invested heavily in LFP batteries as they look to improve the affordability of lithium battery chemistries. 

A number of US and European OEMs — including Stellantis, Tesla, Ford and VW – have announced plans to use the technology.

But China has established economies of scale which have been a significant factor in bringing down costs.

"It is important to acknowledge that replicating these cost advantages entirely might be challenging for non-Chinese producers," says the report.

And the cost of rival high energy density nickel-based batteries, particularly nickel cobalt manganese chemistry (NCM), is decreasing, narrowing the cost gap between the two technologies. 

"LFP's potential long-term price advantage remains unclear," says the report. "Its current energy density limit of 200Wh/kg falls short of meeting consumer expectations for long-range, especially in demanding markets like Europe and the US."

LMFP and Sodium-ion

OEMs may look to hedge their bets with other technologies.

Lithium ferromanganese phosphate (LMFP) has emerged as a potential successor to traditional LFP batteries, offering improved energy density, and could represent a better opportunity for European and US OEMs.

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In the near future, the introduction of LMFP is likely to be via the hybrid approach, by mixing LMFP and NCM cells within the same battery, the report suggests.

Interest in sodium-ion batteries have also seen a resurgence in recent times thanks to high lithium prices.

"China, already a leader in LFP batteries, took a bold step by reviving sodium-ion technology," says the report. "Europe and the US are now joining the race, expanding their investments and research efforts in the field."

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