LFP chemistry could unlock cost-effective vehicle batteries

27 February 2025

• Alternative chemistries and supply chain localisation could help the UK meet ZEV targets
• China bucking the trend with electric car sales figures surging ahead of its UK and European counterparts
• A successful year for UK electric vehicles, sales but a cost a barrier to mass adoption remains

An insight report into LFP (Lithium Iron Phosphate) battery chemistries released by the Advanced Propulsion Centre UK (APC) indicates that the UK and European automotive sectors need to look to China’s success in the upwards trend of electric vehicle (EV) adoption to achieve similar.

Published following the APC’s Quarterly Demand Report and last week’s Energy Storage Summit (18-19 February) in London, the insight report aims to address the key question around the UK competitiveness in LF(M)P battery production, in particular to leverage mass EV adoption. Despite looming legislation banning the sale of new petrol or diesel cars in 2030, the market share of new vehicle sales for electric cars has stalled while a key barrier to adoption is identified to be lower cost battery technology.

The secret to China’s success lies in the focus of automakers on LFP as a battery chemistry, accounting for 68% of batteries manufactured with 99% of the heavy-duty vehicle segment turning to LFP batteries.

The report assesses the attributes of LFP highlighting why it has helped China to accelerate EV penetration at a pace not achieved elsewhere.

Julian Hetherington, Automotive Transformation Director at the APC, commented:

“The slowdown in battery manufacturing investment for the automotive sector has been well-documented over recent months, and it remains a challenging environment with significant investment hesitancy in EV supply chains in evidence across the UK and Europe in response to subdued consumer uptake. The main barrier for consumers is cost. Current battery chemistries like nickel manganese cobalt (NMC), while proving successful from a performance perspective in EVs, remain challenging from a cost perspective vs petrol and diesel vehicles, keeping EV prices stubbornly high and out of reach for many at a time when the cost of living is making itself known.”

China has focused on the production of LFP batteries, and the report identifies five themes that point to its success; technology, cost, manufacturing, supply chain, and recycling.  LFP-based batteries are cheaper to produce compared to NMC-based batteries through avoiding the use of expensive nickel and cobalt elements. Additionally, LFP batteries need less lithium carbonate equivalent to produce cathode materials. The thermal runaway onset plus heat rate discharge characteristics perform better than NMC and this thermal stability delivers higher pack-level efficiencies and larger cells resulting in a reduced overall cost.

Dr Hadi Moztarzadeh, the APC’s Head of Technology Trends whose team spearheaded the report, adds:

“Key takeaways from the insight report are the changes and steps needed to build a resilient supply chain for low-cost battery manufacturing. The regional supply chain currently lacks the capability to deliver lithium and manganese – materials needed for the manufacture of LF(M)P.  We also are at a disadvantage as far as labour and CapEx costs are concerned vs China as well as recycling, with APC research pointing to the fact that there is less profit to be made from LFP when compared to NMC with its valuable metals of nickel and cobalt.

“Localising supply chain is a key step and will give us the opportunity to leverage the benefits of LFP batteries. We need to ensure the forthcoming EU-UK Rules of Origin (ROO) regulation is front of mind as they are due to come into force in 2027. Coupled with proposed LFP export controls from China, which would see the Chinese government needing to approve technology exports, it makes the case for ensuring the wheels are put in motion now to establish local supply chains.”

Onshoring a European supply chain could be a realistic future option as the report highlights a substantial phosphate rock deposit in Norway – believed to be the world’s largest – which could be key as iron phosphate is a key material for LFP battery cells.

The APC’s insight reports sit alongside its Quarterly Demand Reports and provide a more detailed look into key issues.

The APC is the organisation tasked by the UK government and the automotive industry to accelerate the transition to zero-emission transport solutions. It uses its unique knowledge gained from working closely with the global automotive industry to provide insight and forecasting to support government with strategic policy decisions and provide clarity to the industry about projected demand and technology roadmaps.

For an in-depth look at future battery developments for the automotive industry to 2040, see the APC’s Electrical Energy Storage Roadmap.