Tesla used cheaper LFP batteries in half of cars produced in Q1 2022

As Tesla’s profits and prices drew attention last week, a potentially important development for the global car industry was on the horizon.

The American electric pioneer revealed that nearly half of the vehicles it produced in the first quarter were equipped with lithium iron phosphate (LFP) batteries – a cheaper competitor to the dominant nickel and cobalt batteries in the Western world. West.

Disclosure, overshadowed by the carmaker’s $19 billion in sales (about Rs 1,45,530) and By Elon Musk to be in charge of Twitterthis is the first time Tesla has revealed such specifics about its battery product.

It gives a strong signal that iron-based cells are finally starting to gain global appeal at a time when nickel has been hit by supply concerns due to a major producer war. of Russia in Ukraine and contaminated cobalt due to reports of hazardous conditions at mines in the Democratic Republic of the Congo.

Tesla is not alone in betting that LFP batteries, already popular in China, could make their way into Western markets.

According to Reuters’ assessment of tram (EV) scenes and interviews with several players.

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“I think lithium iron phosphate has a new life,” said Mujeeb Ijaz, founder of US battery start-up Our Next Energy. said it was looking for a manufacturing site in the US. “It has a clear and lasting advantage for the electric vehicle industry.”

Ijaz has been in the field long enough to see a technology that didn’t catch up in the US a decade ago gain new momentum. He is the chief technology officer of Michigan-based A123, an original LFP battery maker that went bankrupt in 2012 and was acquired by a Chinese company.

He and other LFP advocates have cited the relative abundance and cheaper price of iron as a key factor in starting to overcome the limitations that have hindered the global adoption of LFP cells – they are larger and heavier, and generally contain less energy than NCM cells, giving them a shorter range.

However, there is a mountain to climb.

According to data from Benchmark Mineral Intelligence (BMI).

The race is much tighter in China, where LFP accounts for 44% of the electric vehicle market compared with 56% for NCM.

It could be a long and difficult road for Western LFP cell manufacturers looking to prosper against rivals from China, which accounts for about 90 percent of global production.

According to BMI’s Chief Data Officer Caspar Rawles, the short-term concern for such companies is their continued reliance on Chinese suppliers for refined ingredients.

LFP cells also contain more lithium than their NCM rivals, and industry experts are concerned that the historic advantage of iron-based batteries of being cheaper to manufacture could be eroded and even erased due to price metal increases.


Tesla has used LFP in several entry-level, US-made versions of its Model 3 since last year, expanding the use of its technology beyond China, where it was about two years ago. started using LFP batteries made by China’s CATL. largest EV battery manufacturer, for some Model 3s.

However, given the historic dominance of nickel and cobalt batteries in the United States, the scale of Tesla’s LFP battery usage in the first quarter of 2022 – which will power some 150,000 vehicles produced – has caused some Analysts and battery experts must be amazed.

Tesla did not respond to a request for comment.

Mitra Chem, co-founded by former Tesla battery supply chain manager Vivas Kumar, is working on making LFP battery materials, initially in California. He said he expected nickel prices to remain volatile because of supply chain splits.

“The best insurance policy auto manufacturers have… is to incorporate more iron-based cathodes into their portfolio,” he added.

American electric vehicle startup Fisker, which plans to use LFP batteries in its low-end SUV models, plans to initially source cells from CATL. But CEO Henrik Fisker says it is in talks with battery suppliers to source batteries made in the United States, Canada or Mexico from 2024 or 2025.

According to Fisker, domestic sourcing is important because it is expensive to ship heavy packages from Asia, especially for low-cost, high-volume vehicles. The executive added that it is also not environmentally friendly.

“(If) I never leave Los Angeles, I never leave San Francisco, I never leave London… I think that’s where LFP comes in really well,” he said of the owners. EVs live in urban areas who drive shorter distances.

Other high-end automakers are also looking at the chemical reaction after the outbreak of the Ukraine war, including Volkswagen’s Audi, it has not used LFP batteries before.

“It is possible that we will see LFP in a larger portion of the fleet in the medium term,” Audi CEO Markus Duesmann said in March. “After the war, a new situation will arise; we will adapt to that and choose battery technology and specifications accordingly.”

By BMW Procurement director Joachim Post also said recently the company is reviewing LFP’s performance. “We’re looking at different technologies to reduce resource usage, and we’re also looking at optimizing chemistry,” he added.


Among their advantages, LFP cells tend to pose less of a fire hazard than NCM cells and can be continuously fully charged without much loss of performance over the life of the battery.

As the global electric vehicle market expands, chemistry is expected to find its way to more low-end consumer and commercial vehicles where further range is not so important.

However, obstacles to widespread LFP cell adoption include finding solutions to improve power density – thereby reducing size and weight – and grappling with increasing costs. of lithium.

Meanwhile, building and expanding LFP production in the United States and Europe will take a long time, underscoring the challenge facing Western governments in reducing their reliance on China.

American startups face an uphill scaling battle to compete with CATL (Contemporary Amperex Technology Ltd), which is backed by Chinese government subsidies and supplies Tesla, among others, with LFP cells.

“Everything has to be disciplined, without any hiccups,” said Bob Galyen, former chief technology officer at CATL, who now runs battery consulting firm, Galyen Energy.

He also noted: “A US-based company doesn’t have to worry about the geopolitical issues that China and the US have.”

© Thomson Reuters 2022

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