Battle of Batteries: Lithium Iron Phosphates Are Good, But Not When Monopolised By China

In the first three months of 2022, nearly half of all vehicles produced by Tesla were built with what are called Lithium iron phosphate batteries (LFP). Last year, it became the dominant battery chemistry for Chinese EV manufacturers.

Here’s how they emerged in the market and the geopolitical implications of not investing in massive battery manufacturing.

Lithium iron phosphate (LFP) batteries are different from more traditional energy dense batteries such as nickel manganese cobalt (NMC) and nickel cobalt aluminium (NCA).

- LFP batteries contain less expensive iron and phosphorus. They don’t contain costly elements such as nickel and cobalt in the cathodes.

- Average cost of NMC and NCA batteries has been hovering around $130 per kWh whereas LFP batteries cost less, perhaps approximately $90 kWh.

Why LFPs are taking off. They cost less and are better at safety and longevity when compared to batteries which are nickel rich.

- But this longevity and safety comes at a cost.

- LFP batteries are less energy dense when compared to the other battery chemistries mentioned above.

- Lower energy density = lower range for your EVs which is a big hurdle to shifting away from internal combustion engines.

The engineering behind LFPs. All lithium ion batteries are charged and discharged by the movement of lithium back and forth between the positive side cathode and negative side anode. This transfer causes reactions which degrade the battery materials.

- The degradation of materials leads to an upper limit on the number of recharge cycles and also on retention of enough energy to power vehicles.

- Such degradation of battery material due to repetition of reactions and loss of charge can also be seen in mobile phone batteries.

- But in an LFP battery, the lithium is moved through iron and phosphorus which is less destructive compared to moving lithium through nickel and cobalt.

- This also means LFP batteries can be charged faster, are significantly safer and perform better in extreme heat.

How LFPs came about. LFP batteries are not new. They have been around since the 1990s. Their low energy density always proved to be a hurdle and they weren’t used that widely due to this primary reason.

- In March of 2020, BYD - the world’s fourth largest battery maker, came up with a new LFP battery design which it said was safer and less expensive compared to nickel rich batteries. The range achievable was also comparable.

- BYD adopted LFP batteries in 2020 and today almost all EVs that BYD produces in China use LFP batteries.

- From just 2020 to now. The transition was quite rapid. Other battery makers have quickly followed suit.

The Chinese domination. The Chinese were dominant in the battery production space earlier and with the LFP boom their domination just got more serious.

- China produces more than 90 per cent of our globe’s LFP batteries.

- CATL, the world’s largest battery maker, also came up with its own design of LFP batteries. Tesla uses CATL batteries in their EVs made in China.

- It is quite possible that LFP batteries will become the most widely used type of lithium ion battery in EV manufacturing, replacing the traditionally dominant batteries with nickel rick cathodes.

Questions to ponder about.

- In the event that India successfully transitions from ICEs to EVs, what will be the implication of the battery manufacturing sector being dominated by China?

- Can India’s own PLI and other state incentives take the edge of Chinese domination? And how soon?

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