Musk-Backed EV Battery Gains in China

"A less-expensive battery technology championed by Tesla Inc.'s Elon Musk rose to dominate the world's largest auto market last year, pointing to challenges for Tesla's U.S. and European rivals.

Official Chinese figures showed that batteries using lithium iron phosphate or LFP technology accounted for 57% of total battery production for vehicles in China during 2021, up from less than half the previous year.

The LFP batteries have stormed into the lead in China because they use relatively inexpensive iron in the battery's cathode in place of costlier metals such as nickel.

Their rise has coincided with the emergence of electric vehicles as a mass-market product in China. In 2021, new-energy vehicles, a category that mostly consists of EVs, accounted for nearly one in six passenger cars sold in China, the world's top auto market by number of vehicles sold.

As Chinese car dealers sell more EVs and a greater proportion of those EVs carry LFP batteries, output of the iron batteries is surging. In 2021, Chinese battery makers produced LFP batteries with 125.4 gigawatt-hours of capacity, more than triple the figure a year earlier, said the government-backed China Automotive Battery Research Institute.

U.S. and European car companies traditionally frowned on LFP batteries because they tend to have lower energy density than nickel-based batteries, meaning the cars they power can't travel as far on a single charge. LFP batteries also are more likely to suffer from poor performance in cold weather.

Over the last two decades, Chinese companies trying to catch up with Japan and the U.S. in battery technology focused on improving LFP technology, not only because of the cost but also because the batteries are less likely to catch fire. A change in Chinese government EV subsidies, which previously favored longer-range cars, also helped the technology gain an edge.

One of the strongest advocates is Tesla's Mr. Musk, who has said that finding enough nickel at reasonable cost is a major production concern. He has pushed back against the idea that customers buying an LFP car are getting a second-class product.

Car makers in the U.S., Europe and Japan are all stepping up battery production and many are working on LFP technology, but they generally haven't gotten as far as Tesla and Chinese makers in bringing the technology into mass-market production.

Tesla first used LFP batteries for its China-made Model 3 in 2020. Last October, the company said it would extend the use of the iron-based batteries to all of its standard-range cars.

Other Chinese EV brands are also becoming heavy users of LFP cathodes. The Hong Guang Mini, a tiny hatchback costing as little as $4,400, was China's bestselling EV in 2021. It is made by a joint venture of General Motors Co. and two other Chinese companies." [1]

 These batteries are special in that they are cheaper, can and should be charged up to 100 percent at all times, and are almost non-degradable. However, they weigh 10-15% more per charge and load much slower. They are very suitable for taxi drivers, transporters and haulers, however for those who want to drive long distances quickly and have the money to change cars more often - better lithium.

1. EXCHANGE --- Musk-Backed EV Battery Gains in China
Yang, Jie. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 15 Jan 2022: B.3.