In a world powered by innovation, lithium-ion batteries have become a staple in modern technology, fueling everything from our daily gadgets to the EV revolution.
This shift is for good reason, as traditional electric car batteries (nickel manganese cobalt batteries, or NMC for short) impede EV adoption and are associated with controversies. Even more disturbing geopolitically, China is currently dominating the EV game. Its leadership in this sector threatens the growth of electric transportation in other economies, which is imperative for creating a greener planet.
However, there is an opening for a better solution. Lithium iron phosphate (LFP) batteries are becoming the preferred battery for electric cars, and I expect them to dominate our roadways soon. Here is why…
LFP batteries are a cost-effective battery for an EV, and they also maintain important safety and performance metrics. As cost is a significant driver in limiting mainstream EV adoption, LFP’s low-cost offering, which is almost one third less expensive than traditional batteries, enables it to be an accelerator of the EV revolution and helps support a cleaner planet.
Manufacturers like Ford, Mercedes-Benz, Rivian and Tesla are all involved in the LFP space, and the LFP market has surged to roughly 30% from 6% in 2020. Even just last month, Stellantis and CATL, two major players in the EV ecosystem, announced they have reached an agreement to invest up to €4.1 billion to form a joint venture that will build a large-scale LFP battery plant in Zaragoza, Spain. LFP batteries have also become the preferred battery solution for 2/3 wheelers (e-bikes for example), which is further driving the growth of LFP in new verticals and emerging markets.
LFP batteries do not contain materials such as nickel, manganese or cobalt, which are metals that can be detrimental to the environment and are also connected to labor issues. There is also an abundance of lithium in markets such as Africa, Latin American, India and Australia, which is not the case with nickel and cobalt. Since lithium is not as finite of a resource compared to the other battery materials, LFP is a more reliable long-term solution to support the EV industry. In addition, LFP batteries are also more resilient and can help increase the number of charge cycles and the battery’s lifespan.
China has long dominated the EV industry, with anywhere between 70-90% of the global market share across the entire battery value chain. This lead is a result of a unified focus on building their battery supply chain years before the average consumer was even aware of EVs.
This trend threatens the worldwide market, which will surely have a major impact in the years ahead if unchallenged. China continues to extend its stranglehold over the market and recently announced plans to limit exports of technology used to extract critical materials for EVs. They are also looking to add battery cathode technology, a critical part of the battery, to the list of controlled exports. Just as with the broader EV industry, China is a dominant force in the LFP battery market, controlling a significant portion of the global production and supply chain.
Like traditional NMC batteries, there is a significant opportunity to create a more sustainable supply chain of LFP batteries by leveraging recycling. Recycling enables the broader battery ecosystem to be more environmentally friendly by ensuring valuable materials are not landfilled, incinerated and otherwise forever lost. Recycling also provides an opportunity to support the continued growth of the industry with a secondary supply of key materials like lithium.
The main differences with LFP are that recyclers have found it difficult to recover materials efficiently and sustainably from LFP batteries. In addition, as LFP batteries do not contain nickel, cobalt or manganese, the value for most recyclers is greatly diminished. Only those that can effectively recover high levels of lithium are able to find success.
Consequently, there are recyclers that can successfully recycle LFP, and they are not all in China. In fact, there are ex-China battery recyclers expected to be even better than Chinese recyclers.
The bottom line is that LFP batteries are going to take over the battery ecosystem. To stay ahead, countries and companies outside of China need to establish a strong and resilient LFP value chain.
Both governments and companies must look at diversifying their sources of critical materials and seek to expand into new emerging markets, such as Africa and Latin America. The Chinese have been doing this for many years, and the rest of the world needs to do the same. It is also important to establish refining capacity for lithium salts, just as Tesla has done in Texas, to refine all sources of lithium into ‘battery ready’ products.
The best initial next steps are to generate broader awareness of the players that are successful with LFP and for governments to implement initiatives to support emerging technology providers. We do not want to wait until the Chinese have too far of a lead in this market and leave the rest of us behind. The world’s global economies and environmental sustainability depend on it.
Nishchay Chadha is the CEO and Co-Founder of Ace Green Recycling, an IP-driven leader of green technologies used to recycle both lead and lithium batteries. Mr. Chadha has worked in the metals space for nearly two decades, and has an extensive background in mining engineering.