A battery chemistry once dismissed by western car makers for being more suitable for local Chinese buses than high-tech, premium electric cars is now going global as companies redo the cost-versus-range sums.
Lithium iron phosphate (LFP) has long been seen as the poor relation to the dominant nickel manganese cobalt (NMC) chemistry that car makers globally have chosen for their lithium ion batteries for its higher energy density. Both are used for the cathode part of the battery, which makes up the bulk of the cell’s price on account of the high cost of the metals.
However, work by Chinese battery companies BYD and CATL to improve the range of LFP cells has persuaded Tesla to heavily rely on the chemistry for its standard-range Model 3 – so much so that 90% of production from its Shanghai factory (currently the main source of European Teslas) use the battery, estimates the bank UBS. It believes BYD, meanwhile, will supply its Blade LFP battery to Tesla’s Berlin factory for the Model Y SUV.
“We were surprised when we first heard Tesla would use LFP because of the consumer perception, but really consumers in China have no problems with it,” said UBS analyst Paul Gong.
Range improvements and the cost advantage have led others to beat a path to LFP specialists in China. In July, Ford announced it would source LFP batteries from CATL for use in its EVs, starting with the Mustang Mach-E from 2023. Ford said that adding the chemistry alongside its existing nickel-based lithium ion batteries would increase capacity and “reduce the reliance on scarce critical minerals such as nickel”. It estimated bill-of-materials savings of between 10% and 15%.
Much of that is the metals, as Tesla boss Elon Musk pointed out in the company’s last earning call: “Iron is the number-one ingredient of Earth by mass, number two is oxygen, which is wild.”
LFP battery chemistry is also less likely to catch fire and better withstands repeat rapid charging.
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