Ford had planned to start production of its Explorer electric SUV in Germany late last year, but then came the order from CEO Jim Farley himself: wait.
The six-month pause allowed the company to switch to using lower-cost, higher-durability lithium-iron-phosphate (LFP) batteries sourced from China's CATL.
“It was better to wait half a year and launch with the latest greatest technology,” Jochen Bruckmann, launch leader for final assembly at Ford's Cologne factory, explained at an event to mark the start of production this week.
Such are the savings unlocked by this newer battery chemistry that entire model programmes, even whole battery plants, are being paused in Europe and the US in the ongoing battle by established car makers to try to match the Chinese on EV costs.
This week, ACC, the battery joint venture between Stellantis and Mercedes-Benz, said it had stopped building work on planned battery sites in Germany and Italy as it reviewed costs. The main stumbling point was chemistry, with ACC now looking at whether to produce LFP cells at its future German plant, a former Opel factory.
Meanwhile, in the US, General Motors has paused production of the Chevrolet Bolt EV for over a year, just so it can switch battery chemistry over to LFP. GM CEO Mary Barra said the move would “significantly improve the profitability” of the car.
Relaunching the Bolt with the new battery chemistry and a facelift would save “billions of dollars” compared with GM’s previous plan of building a new line of affordable EVs, Barra said.
Right now, EVs in Europe and the US are too expensive compared with comparable cars in China.
“The biggest advantage the Chinese have is the cost of the battery,” Ingo Stein, director of automotive and mobility at consultantcy Bain, told Autocar. “They're doing much more on LFP, which is at a lower cost point.”
European batteries up to this point have been focused on the nickel-manganese-cobalt (NMC) chemistry. Last year, just 6% of all EVs sold in Europe used LFP, compared with 67% in China, according to figures from the International Energy Agency.
The advantage of NMC has always been a higher energy density, allowing it to pack more of a punch per kilogram.
The downside is cost, due to the price of the more exotic raw materials it needs. Right now, cobalt is the priciest ingredient needed to build lithium ion batteries, followed by nickel. LFP swaps those out for steel, iron and aluminium – three metals of negligible prices in comparison. It still needs costly lithium, but currently the raw material bill for LFP is half that of NMC, at $16 per kWh versus $31 per kWh, according to data from the bank Jefferies.
Add your comment