Steve LeVine
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 battery powerhouse.
But if non-Chinese players are to capitalize on this tectonic commodities shift, they will have to act fast: Just as it is happening, China is further cornering the market for manganese, the Wall Street Journal’s Chuin-Wei Yap reported last week.
The main chemistries used in almost every major EV sold today are NMC and NCA. Both rely primarily on nickel and cobalt. Cobalt is especially controversial because of where and how it’s mined — mostly in the Democratic Republic of Congo, under conditions that watchdog groups say are often unsafe and inhumane, and that involve much corruption.
But those aren’t the main reasons the automakers are steering away from NMC and NCA. It’s because LFP, even though its inferior density means it can’t take a vehicle as far as NMC and NCA on a single charge, is much cheaper than those formulations. By the end of last year, the cost of LFP-based battery packs was already below the milestone line of $100 kWh, down to $80, and hence nearing parity with combustion-powered vehicles.
InLFP, the automakers are turning to one of the most fought-over — and eventually forgotten — formulations in modern batteries. It was invented in the mid 1990s in the lab of John Goodenough, the legendary University of Texas physicist who shared the Nobel Prize for the creation of the lithium-ion battery. Though billions of lithium-ion batteries have been manufactured since their invention, all are variations on just four commercial formulations. Three of these variations were invented in Goodenough’s lab. Hence his towering status.
Yet, over the subsequent decade after its creation, LFP somehow ended up in the hands of the Japanese, the Chinese, and an MIT-based startup, all under disputatious circumstances, including accusations of theft. In 2008, A123, the MIT-based startup, challenged Goodenough’s patent, and the next year floated the biggest IPO of 2009 with an LFP-based battery that it intended for power tools and, eventually, EVs. It was a blockbuster debut, and A123’s value doubled in just a few days. A123’s battery was adopted by another much-discussed startup, an EV company called Fisker and, with more than a billion dollars in the bank, the company seemed on its way to super-stardom. Only, a battery glitch and imprudent market moves by both A123 and Fisker backfired: In 2012, A123 filed for bankruptcy. The next year, its automotive operations were acquired by Wanxiang, a Chinese company.
And with that, LFP was presumed dead. No one discussed LFP. In the late ‘oughts and the subsequent years, Tesla was using lithium manganese oxide in its Roadster, and GM and Nissan relied on manganese spinel in their Volt and Leaf plug-ins, respectively. In subsequent models, Tesla turned to NCA and the other two automakers to NMC. I found no record of LFP in any major model by any legacy automaker or startup.
But when I contacted Simon Moores, managing director of Benchmark Minerals, a London-based battery research firm, he made an important point: China never gave up on LFP, so it was not dead there.
In 2009, BYD, the Chinese automaker, was fiddling with an LFP formulation, the provenance of which is not known. And China’s CATL, formed in 2011 and today the largest lithium-ion company on the planet, also makes LFP, including for Tesla. Throughout the last decade, the Chinese government subsidized the manufacture of LFP, especially for electric buses. By 2018, more than 90% of China’s new public buses had LFP batteries.
In other words, the major automakers’ embrace of LFP in a way reflects less its resurrection than its unexpected breakout from China. Previously, only China was discussing EVs powered by LFP. Now, it’s becoming a go-to formulation everywhere.
The new western embrace of LFP “is surprising because we were not taken seriously by Detroit or Germany because of range and cost was still pretty high,” said Bart Riley, who was a founder and chief technology officer of A123, and is now CTO of Conamix, a lithium sulfur battery startup. “Our cost was not good enough to win EV business.”
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