EV battery chemistries see rapid change, with more change to come: FT Summit

Electric vehicle battery chemistries have seen rapid change over the last few years, mainly to reduce usage of costly nickel and cobalt, and more change will follow as cheaper iron and manganese gain market share, participants at the Financial Times' Commodities Global Summit in Lausanne said this week.

The sector looks set to continue being dependent on production trends originating in China, with Europe still largely struggling to set up its own battery making facilities due to red tape, lack of incentives and regulatory and market uncertainties, including which chemistry will be best to use, executives on a battery metals panel said.

One marked recent change has been the shift from NMC (nickel-manganese-cobalt) batteries to LFP (lithium-iron-phosphate) batteries, particularly in China. Global trader Trafigura's CEO Jeremy Weir said that over the last two-to-three years LFP batteries have jumped from accounting for some 20% of the EV batteries market to about 80% at present.

"And this is a problem because people make investments with a view to a 20-year time horizon and then chemistries change," Weir said.

Fedor van der Post, head of battery materials and asset development at critical minerals provider WMC, said LFP batteries have gained market share because China is producing their raw materials cheaply from residues of iron titanium from other industries and that LFP production costs can be very different in different countries.

However, because of the lower range offered by LFP batteries, "it will be tough" for western car users "to get by just with LFP vehicles," partly because of insufficient charging infrastructure and times, van der Post said.

"In Europe there will be a place for Chinese vehicles... until customs tariffs start to kick in," he added.

NMC and LFP are set to be the two biggest competing EV battery chemistries over the next decade, panelists said.

Major regional differences in chemistries and usage will nonetheless remain, said Arie Pilo, global head of principal investments at Castleton Commodities International (CCI), a trading and investment firm.

He said that there is a bigger appetite for ternary batteries in North America, where people drive longer distances than in Europe or China.

Geert Olbrechts, CTO and executive vice-president of Europe-based battery producer Umicore, said the new high lithium manganese (HLM) battery will soon be coming to Europe and use of the much talked-about sodium ion batteries looks a little further off.

Umicore announced last year it will start to industrialize HLM cathode active materials in EVs in 2026. The manufacturer describes the HLM battery as lower cost, high energy-density and with advantages in circularity.

Overall, the cost of battery packs is about an eighth of their prices several years ago, van der Post noted.

Energy density and weight are areas still needing improvement, panelists agreed. Olbrechts said that cathode active materials account for about 100 kg of the weight in an EV, 100 times more than the battery needed in an internal combustion engine car.

Stationary storage

In stationary batteries, roughly 10% of the batteries market, LFP technology has been dominant and solid state or semi-solid state batteries are seen as probably increasing their market share around the 2030s.

CCI's Pilo said sodium-ion is the most realistic future candidate for competition with LFP for stationary batteries moving forward as sodium is "1,000 times more common than lithium," so it's cheaper and also safer as it is not flammable.

However, sodium-ion batteries have lower energy density than lithium-bearing batteries and so are recognized to be less suitable for EVs.

James Clark, VP of strategic supply chain at Norwegian battery maker Freyr, said that Europe is less competitive than China in battery manufacturing because it has very little cathode or cell production and still needs to build up its regional materials supply chain.

"We may be dependent on China for a long period," added van der Post, noting that this is what makes striking joint ventures with Chinese companies attractive in this area.

Permitting for new ventures in Europe also needs to speed up, new battery makers in China can set up a plant in 18 months although this could take six-seven years in Europe, he said.