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Big Automakers Are Underplaying Surprising News: LFP Batteries Are Back
In a much-overlooked shift, Ford, VW and Tesla have rushed to an old chemistry
Last week, Ford CEO Jim Farley made a big splash with his plans to go digital, mine data, and leverage connectivity. Ford was going to “lead the electric revolution” with an “ion boost” and reduce its battery costs by 40% by the middle of the decade, with more to come. Ford shares ended the week up 9%, and 70% for the year.
Buried in Farley’s presentation was a significant but almost unremarked-upon shift by the company: Some Ford electric vehicles, particularly those meant for construction and other punishing businesses, would spurn tried-and-true battery formulations relying on large proportions of nickel and cobalt. Instead, Ford would power its larger pickups and other vehicles with a long-ago discarded battery chemistry called LFP, short for lithium-iron-phosphate, that contains none of the usual metals.
The announcement came two months after Volkswagen made a similar disclosure: In March, its CEO, Herbert Diess, said the Germany automaker would use LFP for its cheaper, entry-level EVs. And last October, Tesla CEO Elon Musk was the first major EV-maker to go this direction, announcing that not his workhorse NCA batteries, but LFP would go into standard-range Model 3 sedans assembled in China and sold in Europe.
The increasing trend is surprising and important: To the degree future EVs snub nickel and cobalt, they will overturn tens of billions of dollars in long-term financial presumptions by miners, commodity traders, bankers, investors and metals-producing countries. This is especially the case since VW — the world’s second-largest automaker, and the most EV-ambitious next to Tesla — said it also would rely on high manganese batteries for its middle-market vehicles, squeezing out nickel and cobalt even further.
Geopolitically, the trend could additionally undermine the best-laid plans of China, which has spent the last several years tying up global supplies for cobalt, nickel and other battery materials, and ease concerns about Beijing’s future control of the global battery industry. It is China’s control of its supply lines that makes it the world’s most potent…
