Demand for LFP Batteries Growing

LFP battery of Ford Explorer

European countries are focusing on the expansion of compact and inexpensive electric vehicles (EVs) in an effort to reduce carbon emissions. Under the circumstances, the EV battery market is signaling a significant change as Tesla, Volkswagen, Daimler and so on are expected to increase the use of lithium iron phosphate (LFP) batteries, which are characterized by being safe and economical although low in energy density, inefficient and heavy.

South Korean battery manufacturers are currently concentrating on nickel-cobalt-manganese (NCM) batteries, which are higher in energy density, whereas Chinese battery manufacturers are supplying a large quantity of LFP batteries. The former are likely to try to make their products more economical by, for example, reducing the cobalt in and adding aluminum to their NCM batteries. In other words, they are likely to continue to refine high-energy density NCM batteries in that the driving range is the most important factor in the end.

According to industry sources, at least 23 and 14 models of battery EVs are expected to debut in Europe in 2021 and 2022, respectively. Those include Tesla’s compact EVs and the vehicles are predicted to be equipped with CATL’s LFP batteries. Previously, batteries of this type were used mainly by Chinese companies. However, those emerged as an important part of the global battery industry last year as Tesla began to employ them in quantity.

Volkswagen and Daimler are currently working on compact EVs targeting the European market and these are likely to come with LFP batteries, too. Chinese battery manufacturer BYD is producing LFP batteries to be supplied to Daimler. In addition, Apple’s self-driving EV is expected to debut in 2024 with an LFP battery in it.

This trend is no good news for South Korean battery manufacturers, which are increasing their NCM battery manufacturing capacity. LG Energy Solution is planning to cope with this situation by reducing the cobalt content by 5 percent and adding aluminum as an inexpensive material to its NCM batteries, that is, with NCMA batteries. The per-ton price of aluminum is US$1,500 or so, about 5 percent of that of cobalt. In addition, the properties of aluminum lead to output performance improvement to the extent of covering next-generation EVs such as electric trucks. Samsung SDI, in the meantime, is working on an NCA battery in which manganese is completely replaced by aluminum.

Chinese companies are redoubling their efforts as well. For instance, they introduced module-less cell-to-packaging last year and are developing lithium-iron-manganese-phosphate (LFMP) batteries for driving range extension. In other words, the South Korean and Chinese companies are likely to focus on price competitiveness and performance enhancement in their competition, respectively.
 

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