Theme of the Day: Has LFP already won the battery race?

Battery manufacturers are seeking chemistries that balance performance, cost, and sustainability. Enter Lithium Iron Phosphate (LFP) batteries. For years, high-nickel cathodes like Nickel Manganese Cobalt (NMC) and Nickel Cobalt Aluminium (NCA) reigned supreme, valued for their superior energy density. But the tide has turned. The rising costs of nickel and cobalt, combined with supply chain vulnerabilities, have prompted a shift toward LFP. By eliminating cobalt and leveraging more abundant raw materials, LFP presents a more sustainable and socially responsible option crucial for manufacturers navigating tightening regulations.China has long dominated the LFP market, leveraging decades of technological refinement and economies of scale. But as global demand rises, new regional markets are emerging, driven by supply chain reshoring efforts and sustainability goals. Governments worldwide are taking decisive action to strengthen domestic LFP battery supply chains with policies that actively encourage local production and create a fertile landscape for new investments. From an investment perspective, LFP isn’t just a proven technology - it’s a high-growth opportunity. With affordability, performance, and scalability on its side, LFP is expected to be a cornerstone of the future battery landscape.Cost: Lithium-iron-phosphate (LFP) avoids the use of expensive cobalt and nickel, relying instead on abundant iron and phosphate which means lower cell costs. LFP cell prices are >20% lower than NMC cells and keep getting cheaper. This is vital for reducing the cost of EVs and offers better returns for grid storage developers.Supply chain security: avoiding cobalt and nickel has the double benefit of a less risky supply chain, with lower exposure to supply bottlenecks in conflict regions and input material cost fluctuations.Manufacturing base: LFP’s rapid ascent has been enabled by massive manufacturing investments. In 2025, global installed LFP battery cell production capacity is expected to exceed 1,100 GWh and it accounts for over 60% of new battery cell output worldwide.Performance and Safety: LFP’s thermal stability, long cycle life and improved discharge performance make it ideal for stationary and C&I storage systems where reliability is critical, investors are looking for returns over a longer period and battery fire incidents have caused concerns for developers.In short: affordability, security of supply, mass manufacturing, performance safety - who could argue with that?Several major vehicle manufacturers, including Tesla, Ford, Rivian, and Volkswagen are investing in LFP battery infrastructure as they steer towards this chemistry. Tesla has been pivotal in accelerating LFP adoption, revealing that it would switch all standard-range vehicles globally to LFP batteries. This shift has created strong momentum for upstream suppliers, while Tesla’s expanding gigafactory network is scaling LFP production worldwide. In 2023, LFP batteries were under the bonnet of over 40% of EVs globally. Some estimates suggest that in 2024, LFP made up 59% of all battery cell production globally.