In order to make electric vehicles more accessible in the market, many automakers like Tesla Inc. and Ford Motor Co. have shifted to more cost-effective battery types – lithium iron phosphate (LFP) batteries. They are more affordable to produce since the material for their manufacture (iron ore) is abundant and relatively cheaper compared to other batteries used in mainstream European and US vehicles. The growing demand for LFPs has allowed China to entrench their influence in the global battery industry because the majority of their LFPs are supplied by Chinese manufacturers.
Lithium-ion batteries are used to power electric vehicles and they contain positively charged lithium particles, which move between the negative and positive electrodes (anodes and cathodes) to discharge and recharge the battery. In LFP cathodes, these also contains iron and phosphate. The material used to make these batteries determines the battery’s performance, including energy capacity, charging and discharging rate, and fire safety. Nobel prize-winning scientist Dr. John Goodenough’s team has been responsible for proving the viability of LFP as a battery material. Around the mid 2000s, Chinese corporations started to employ this cathode technology to power their growing electric vehicle industry.
The merit of this battery technology extends to relative fire-safe performance and lower production costs. Evidently, Chinese companies are leading the LFP market, accounting for a majority portion (99%) of the global manufacturing in 2022 according to Benchmark Mineral Intelligence. While other countries are also making efforts to develop their own LFP products, China’s share is expected to only fall slightly to 96% by the end of the decade. Tesla has already been utilizing LFPs for their vehicles produced in the Shanghai plant, and other car companies like Mercedes-Benz Group AG, Volkswagen AG, Rivian Automotive Inc., and Ford are looking to join the trend later this year and 2024.
When it comes to cost superiority, BloombergNEF observed in its 2022 survey that Chinese-made LFPs are the cheapest among all lithium-ion batteries. There is a sense of urgency among EV makers to cut expenses and this is a significant advantage they can look forward to. However, its effectivity is dependent on how long China can retain the market dominance, as the US and the European Union are investing billions of dollars to establish competing markets. Furthermore, LFPs still fail to replace other batteries like nickel, cobalt and manganese (NCM) batteries for high-end EVs due to their low energy density. New technologies for sodium-ion batteries are also being developed, though they are more expensive and require more work to create an efficient production chain.
Tesla Inc. is one of the most well-known companies associated with LFP batteries in the electric vehicle market, and the brand is a world leader in electromobility. Founded by investor, engineer, and inventor Elon Musk, Tesla has established itself as a leader in innovation and sustainability. Tesla produces and designs sustainable cars, solar panels and battery storage from its Silicon Valley headquarters. Through its high-performing, sustainable cars, Tesla has revolutionized the automobile industry and given motorists another reason to purchase electric vehicles.
John Goodenough is a Nobel prize-winning scientist at the University of Texas at Austin. He is most well-knownfor his discovery of LFP as a viable cathode material in the late 1990s. Dr. Goodenough is renowned for his expertise in solid state battery technology and his research showed that LFP cathodes could hold larger amounts of energy, charge and discharge faster, and had the potential to be a safer alternative to Lithium-ion batteries. His work has helped drive the development of more efficient LFP battery systems, which have had a major influence on China’s rise in the battery industry.