What are the prospects for LFP batteries?

Amidst the threat of high nickel prices, will automakers embrace the full potential of LFP batteries?

Sam Adham, Senior Powertrain Research Analyst

19 May 2022

Considering the astonishing increases in the price of battery-grade nickel, and that supply is expected to remain in a precarious situation, there is renewed interest in alternatives to nickel-based NMC/NCA batteries, which most OEMs have considered to be the de facto solution for medium-and-high-range battery-electric vehicles

A brief overview of the unfolding situation:

    • The iron-based LFP battery has until recently been considered by non-Chinese companies to be an inferior technology, mainly due to its energy density disadvantage, but BEV range expectations are now giving way to cost and supply concerns
    • LMC Automotive’s analysis explores the further prospects for LFP, why it is restrained in our forecast when compared to nickel-based chemistries, and why OEM plans do not match up with its supposed advantages
    • LFP is a viable nickel-free and cobalt-free alternative to NMC, but many automakers remain reluctant to embrace it. Only one is using it across the spectrum of small, medium, and large vehicles. The remainder are limiting its use to entry-level model variants
    • However, technical improvements are unlocking LFP’s suitability for larger vehicle segments
    • On the other hand, OEMs have reasons for their hesitancy:
      • LFP has other technical and ESG challenges that have to be addressed
      • It is not a simple feat for an OEM to switch chemistries because of long vehicle development cycles
      • The pipeline for LFP battery cell, active material, and precursor plants in Europe and North America is woefully underdeveloped, increasing barriers to its expansion outside of China

 

With further investment in its supply chain, LFP at its full potential can, and should be, occupying more of the BEV battery market. It has become a ‘good enough’ cost-effective alternative for most segments and consumers should not necessarily have to live with much shorter ranges.

To read the full, free indepth Analyst Briefing about the potential for LFP batteries in the BEV market, please contact us at forecasting@lmc-auto.com.