For years, nickel manganese cobalt (NMC) batteries dominated the EV market due to their high energy density, making them ideal for long-range applications. However, recent trends show that lithium iron phosphate (LFP) batteries are quickly becoming the preferred choice for many automakers due to their cost advantages, safety benefits, and longevity. As production scales up, LFP batteries are expected to take an even larger share of the EV battery market in the coming years.
Why are automakers switching to LFP batteries?
- Lower Cost: LFP batteries are significantly cheaper than NMC batteries. According to BloombergNEF’s analysis, LFP cells, on average, are 32% cheaper than NMC cells. Sunoj George, director of battery engineering and propulsion architecture at Rivian, stated that his company has seen savings of 20 to 30% with LFP. In September, LFP battery prices fell below $60 per kilowatt-hour, helping drive global battery cell prices to a record low., translating to cost savings of approximately $1,500 to $3,000 per vehicle, depending on battery size.—because they do not rely on costly metals like nickel and cobalt. This makes EV production more affordable and supports cost reductions for consumers.
- Improved Safety: One of the major weaknesses of NMC batteries is their higher susceptibility to thermal runaway and fire hazards. LFP batteries, in contrast, have a higher thermal stability (270°C compared to 210°C for NMC), making them safer and less prone to overheating. Higher safety also means that LFP batteries also means that cells can be packed more tightly, allowing the size of the pack to not differ much from NMC batteries despite the difference in density.
Image Source: Mayfield Energy - Longer Lifespan: LFP batteries can withstand 2 to 4 times more charge cycles than NMC batteries, giving them a significantly longer operational life. This translates to lower long-term costs and increased durability, especially for fleet and commercial EVs.
- Supply Chain Stability: The nickel and cobalt supply chain is highly volatile due to geopolitical concerns and ethical issues related to mining. LFP batteries rely on more abundant and ethically sourced materials, reducing dependency on unstable supply chains.
Image source: Mayfield Energy
How much has demand risen for LFP Batteries?
In 2020, LFP batteries accounted for only 6% of the EV battery market. By 2023, that number had surged to approximately 30%, reflecting the industry’s rapid shift toward this chemistry. According to the IEA’s Global EV Outlook 2024, LFP adoption is projected to continue growing as manufacturers integrate them into more models.
Data source: International Energy Agency
Leading automakers are transitioning to LFP
Several major automakers have already incorporated LFP batteries into their EV lineups:
• Tesla: Introduced LFP batteries for its standard-range models in 2021, beginning with China-made Model 3s and expanding to global markets.
• Ford: Plans to use LFP batteries in the Mustang Mach-E and F-150 Lightning to reduce costs and make EVs more accessible.
• General Motors (GM): Discontinuing the Ultium brand in favor of more affordable LFP-based battery solutions.
• Renault: Announced that starting in 2026, it will integrate LFP batteries into its EVs to improve cost efficiency.
• Volkswagen: The China-made ID.3 now features LFP battery packs, reducing production costs while maintaining strong performance.
• Hyundai: Developing next-generation high-capacity LFP batteries, aiming for an energy density of 300 Wh/kg by 2025, which could eliminate one of LFP’s traditional weaknesses—lower energy density.
Challenges and Improvements in LFP Technology
Historically, LFP batteries had lower energy density than NMC batteries, leading to shorter range per charge. However, ongoing advancements are addressing this limitation:
• Energy Density Improvements: Innovations in LFP cathode chemistry are closing the gap with NMC, making LFP suitable for a wider range of EVs.
• Cold Weather Performance: New battery management systems (BMS) are helping optimize LFP performance in sub-zero temperatures, a challenge that previously gave NMC an advantage in colder climates.
Will NMC batteries be completely replaced?
With more automakers shifting towards LFP, NMC batteries may no longer dominate as they once did. The cost-effectiveness, safety, and longevity of LFP batteries make them a strong candidate for mass-market EVs, particularly in standard-range and commercial applications.
However, NMC batteries are still likely to remain in high-performance and luxury EVs where maximizing range and power output is crucial. Some companies are also developing solid-state batteries and next-generation high-nickel chemistries that could push NMC forward in niche applications.