Behind the spectacular penetration of batteries in vehicle applications, the question of cell chemistry remains a key driver to ensure that all needs are met. The way passenger vehicles, commercial vehicles and off-highway equipment use this energy is unique, so a single active material combination cannot suit them all. We tend to hear a lot about Nickel Manganese Cobalt (NMC) and Lithium Iron Phosphate (LFP) as the most popular chemistries, but it remains unclear what will be the dominant choice in the future.
Cell chemistry choices for passenger vehicles
In passenger vehicles, a crucial factor is energy density. The higher the density, the more range will be available in a reasonable weight. Drivers expect less expensive EVs that offer the same versatility as combustion engines (range, fast charging). The NMC chemistry is the best one to this regard, making it the most popular among major OEMs. Out of the top 5 EV selling groups in 2022, four were using NMC cells in their vehicles such as the Volkswagen ID.4 and ID.3, the Peugeot e-208 or the Fiat 500e. However, the NMC chemistry is expensive because of the nickel and cobalt it contains. Combined with exponential demand for batteries, that puts pressure on production costs, ultimately impacting final consumers.
That explains why the LFP chemistry, which does not contain expensive metals, is gaining momentum. Not only is it cheaper, but it is also safer regarding thermal risks and has a longer life cycle. Nonetheless, LFP offers a lower energy density, and it is less profitable to recycle. Among other reasons, it is mainly because there is no cobalt and nickel to be refined and sold. In addition, the NMC recycling process shows a higher degree of optimization and is thus more profitable, according to FEV.
Nonetheless, it has been the chemistry of choice for Tesla since 2021 on its shorter-range models, mostly for cost and nickel /cobalt scarcity reasons.
Commercial and off-highway: a slower electrification path
In commercial vehicles and off-highway industries, user needs are more diverse, so market players are still considering several chemistry options depending on the end usage.
Long-haul trucks will need a safe battery with high longevity (aiming for as many charging cycles as possible) because they travel much more distance per year and over their lifespan. Daimler Trucks estimates the average truck drives 60 000+ miles a year versus 10 000+ miles a year for a passenger car. Charging time is also less of an issue due to laws that regulate the work time of drivers. Planning range is therefore easier, making it a less vital aspect than for passenger cars. On top of that, wireless charging solutions are currently tested, a relevant option that would enable charging while loading, for instance. In such a context, LFP batteries are favored for their superior longevity. Electric trucks are expected to account for only 8% of the global market by 2026 but could reach nearly 22% by 2030, according to ACT Research´s forecast.
Off-highway vehicles often have different requirements, like mining trucks that need to perform heavy duty work during a shorter time range. End users are businesses who are tied to profitability, meaning equipment price, range or performance are crucial. OEMs must work to convince those companies that targeted solutions can address their concerns. New chemistries are developed for those applications specifically, like the lithium – titanium – oxide (LTO) from Toshiba. LTO allows for over 20 000 cycles on average, compared to 3 000 to 5 000 for LFP, making it the longest lasting battery chemistry. It also allows for very fast charging (80% in 3 minutes), a suitable option for energy-intensive tasks.
“For many heavy duty applications fast charging, lifetime and safety are key factors to select the best battery technology. The possibility to reduce the battery size and to avoid replacements over lifetime are more important factors than range and energy density. LTO is the most powerful, robust and safest Lithium Ion technology and offers many benefits for applications where the energy is actually used rather than only stored” said Toshiba’s Vice President of Battery Division, Volker Schumann.
Regional differences in automotive applications
The penetration of LFP and NMC is growing at a different pace dependent on the region and on the OEM. In Europe, LFP only has a 4% market penetration for 2023 as the main OEMs remain loyal to NMC. Renault, for example, does not plan to invest in LFP as it secured the supply of French-built NMC cells from Envision and Verkor starting in 2024-2025. Some OEMs like Volkswagen or Stellantis have started to consider the LFP technology to enter the sub-€25 000 EV market. For now, only one company, Eleven ES, started to produce LFP cells in Europe at its Serbian plant that opened in April 2023.
In North America, NMC is also the most common chemistry, but LFP is growing fast. According to Rho Motion, it went from a 6% market share in 2022 to 15% in 2023, driven by Tesla´s growth. While China controls the entire LFP supply chain, the US has started to invest in it too. ICL, a biochemical firm, is planning to open a $400 million LFP manufacturing plant in 2025, the first of its kind in the US.
In China, LFP has become the number one chemistry with a 59% market share in 2023 due to domestic giants, like BYD and its Blade battery, using it widely. CATL, the world´s number one battery manufacturer, unveiled its Superfast Charging LFP battery in August 2023, aiming at 400km of range with a 10-minute charge. Despite the growing interest towards LFP, the International Energy Agency expects that NMC will remain dominant: LFP is estimated to account for 30% of the market globally by 2030.
Conclusion
The battery market is driven mostly by automotive applications, where electric vehicle growth is exponential. For now, two battery chemistries are in competition, NMC being the preferred option among automakers. But the price sensitivity of customers and the pressure on expensive metal supply make cheaper LFP batteries a very interesting alternative, hence their growing market share. In the future, the solid-state battery could be the game changer the industry is hoping for thanks to its higher energy density, improved safety, and quicker charging time. However, it remains a long-term perspective from a research and development standpoint.
The electrification of trucks and off-highway vehicles will be slower as it is more complex to address the very challenging needs of end users. The industry is only at the very beginning of its journey and customer trust has yet to be gained.
Article Prepared By:
Théo Castel, Analyst Automotive
Isabelle Kraft, Senior Analyst Automotive
Audrey Courant, Managing Principal