How Tesla’s Quest for Cheaper Batteries Boosts China

The biggest obstacle to mass adoption of electric vehicles is high sticker prices. And the most expensive part of an EV is its battery, which accounts for around a third of the overall cost. That’s why carmakers in China, the leader in EV production, have been switching to lithium iron phosphate, or LFP, batteries, which are cheaper than other widely used power packs. Now, US manufacturers including Ford Motor Co. and Tesla Inc. are trying to catch up. How quickly LFPs are adopted will help decide how soon the world shifts from gas-powered cars to EVs — and who dominates the global auto industry in this new era.

The key component in the lithium-ion batteries that power EVs is the cathode, which determines how much energy they can hold and how fast they can be charged. Most lithium-ion battery cathodes are made of nickel and cobalt. US-based researchers identified LFP as a viable cathode technology in the late 1990s. Chinese companies began to commercialize it in the mid-2000s to power the country’s emerging industry, and Western EV makers have begun to embrace it too. Tesla is using LFPs at its plant in Shanghai. Ford will use them in its Mustang Mach-E sport utility vehicle this year and in its F-150 Lightning pickup from 2024. Mercedes-Benz, Volkswagen and Rivian Automotive have also pledged to use LFPs.