Over the last 15 years, across most of the developed world, Lithium Iron-Phosphate (LFP) EV Batteries gave way to Nickel-based chemistries like Nickel-Cobalt-Manganese (NCM). The trend happened for 2 good reasons: NCMs (or NCAs or NMxs) are smaller, taking up less space; and they’re lighter with a higher energy-density, allowing for greater range.
But with commodity prices soaring, LFPs have done a U-turn for 2 good reasons of their own: they’re cheaper than Nickel Batteries, because they don’t contain super-rare elements; and they’re more stable at high/low charge states and under temperature duress, so they last longer — which adds to their cost savings appeal.
LFPs have long been the more popular choice in China, where commutes are shorter so there’s less range anxiety, and where lower incomes make savings paramount. But the Nickel Battery argument is also running out of juice outside of Asia, with a renewed interest in LFPs from OEMs the world over.
On 20 October, Tesla announced it’s changing the chemistry in all its standard-range 3 and Y model batteries to LFP. While they’ll continue to use Nickel Batteries in their longer-range EVs, the move will increase profit margins for their lower-priced models without having to raise prices.
Little over a week later, Mercedes-Benz also declared a switch to LFPs for its lower-range EVs, their EQA and EQB models, from 2024. Reasons cited were the increasing Nickel price, and a confident bet that consumers will accept shorter ranges in the cheaper models.
Other automakers such as Ford and VW have expressed interest in LFP battery chemistry for lower-priced models too, saying it’s particularly appealing for inner-city commercial vehicles like delivery vans that don’t necessarily demand a huge range.
All of which leaves Lithium explorers like Pan Asia Metals (ASX:PAM) in a key position. The element is present even in Nickel Batteries, just in smaller quantities — but the resurgence of LFPs makes it that much more desirable. So even if both battery types hold their charge in the market, Lithium is the metal likely to go the distance.