Without critical metals in the battery, without using the « rare metals » fake-news, Chinese BEV-LFPs, that are technically and commercially up to scratch, theoretically have the world’s door open from September 21, 2021, especially to the world’s largest market: the European Union.
In La Tribune 21/09/2021
Toyota’s president predicted that the advent of battery electric vehicles (BEVs) would cause a collapse of the auto industry. But which brands exactly?
September 21, 2021 sees the fall of some Lithium Iron Phosphate (LFP) batteries royalties surrounding patents since 2009, that power some BEVs, particularly in China. Beijing has never recognized these royalties for the manufacture and marketing of LFP batteries on its territory. It has therefore taken the opportunity to improve and modernize this safe, economical technology and market it exclusively in China. Among Chinese manufacturers, two companies in particular supply LFP batteries to Chinese carmakers and Tesla: CATL, the world leader in batteries, and BYD, the world leader in LFP-only batteries, but also the second largest EV manufacturer in the world behind Tesla, with Warren Buffet as its reference shareholder.
These batteries have advantages. Since they contain neither nickel nor cobalt, they are not subject to supply problems and price fluctuations for these metals, and are therefore less expensive. Their longevity is also greater than competition: Nickel-Cobalt-Manganese (NCM) batteries.
Nickel problem
As the nickel content increases, the NCM battery becomes more unstable. Without nickel, LFP batteries do not have the same risk of overheating and fire, so they are safer. Moreover, the president of BYD declared that the safety of future NCM batteries with very high nickel content was becoming an irrational safety calculation.
As for Elon Musk, his vision was strategic: « Nickel is our biggest concern for scaling lithium-ion cell production. That’s why we are shifting standard range cars to an iron cathode. Plenty of iron (and lithium)! »
But LFP chemistry also has a disadvantage. Without nickel, LFP batteries give BEVs a shorter mileage range than NCM batteries. It is this characteristic that a few years ago pushed them out of the choices of Western, Korean and Japanese manufacturers in favor of NCM batteries with higher electrical density.
Exporting LFP batteries without hindrance
In the meantime, however, since it has been working on it, Chinese R&D has been making progress on its own with LFPs. Its advances are so tangible in extending the range, that they are found in more than one in two Chinese BEVs, and Tesla indicated on July 26 that two-thirds of its cars could be equipped with LFPs in the future. Moreover, thanks to the latest innovations – silicon-doped anodes, cell shapes, vehicle frame arrangements, etc. – LFP proponents guarantee that their BEVs will have an even longer range: 600 km and more, but also a time of less than 30 minutes to recharge the battery to 80 percent.
Less noise, less maintenance, less pollution, and with a longer range LFP battery, with better longevity, increased safety and lower cost, BEVs will go under the happy $100/kWh mark, parity with the cost of internal combustion cars, sooner than expected.
Chinese BEV-LFPs soon in Europe?
Consequently, without having strategic metals in the battery, without using the « rare metals » fake-news, Chinese BEV-LFPs, that are technically and commercially up to scratch, theoretically have the world’s door open from September 21, 2021, especially to the world’s largest market: the European Union. This undoubtedly explains the all-out offensive by Beijing brands that we are witnessing at the end of 2021 and that prefigures 2022: selling quality BEVs, but at a lower price.
Proof that the threat is real, to catch up in this field, the Korean LG Chem, the world’s second largest battery producer behind CATL, started substantial investments in LFP at the end of 2020. This week, it just signed an agreement to set up a new LFP plant in Jingmen, China, recognizing that this technology performs well while being less expensive and safer.
One last important point. In Europe, battery recycling is strictly mandatory, as is the reuse of recycled metals in new batteries. Recycling an NCM battery is cost-effective because the recovered nickel and cobalt pay the recycler. Without these metals, an LFP battery is less valuable, but must still be recycled by the car manufacturer.
One cataclysm can hide another
Japan, where BEV sales were less than 1% in 2020, will ban the sale of internal combustion vehicles in mid-2030. How should Toyota, the world leader in volume, champion of hybrids, and until recently so unfavorable to BEV, react to this ban by predicting that it would precipitate the collapse of the automobile industry? Who was he thinking of?
In this hypothesis, the United States, intoxicated by the « rare metals » infox, sold less than 2% BEVs in 2020. Will they have an intact domestic manufacturer in two years in addition to Tesla?
In Europe, BEVs are all the rage. Copying Tesla, VW has included in its strategic plan in-house manufacturing of its LFP batteries for the entry level, Lithium Manganese for the mid-range and NCM for the high-end.
If others European manufacturers have only approved NCM batteries on models, their BEVs may be more expensive. Will the entry-level segment see the collapse of some European brands, equipped exclusively with NCM batteries, to the benefit of Chinese brands?
In the mid-range, how convincing a commercial message will European brands with NCM BEVs have to justify their technical choices? Would a collapse mean mergers: two European groups, one in France and one in Germany?
The German high range BEV with NCM batteries seems to be saved thanks to the image of its brands and the software incorporated. But will this be enough to continue inspiring consumers? Will these brands be able to remain independent of each other, if their entry-level range is cannibalized by cheaper vehicles?
Buying sovereignty
In other words, if the market prefers the cheaper, Chinese BEV-LFPs are a threat as of September 21, 2021. On the other hand, if the market prefers to buy sovereignty, which is often more expensive in Europe, then the threat erodes.
Finally, after cobalt, nickel, iron and manganese batteries, there will be other fateful dates, other September 21s, which will show either that one cataclysm can hide another or will confirm winning industrial options. These are already taking shape: solid electrolyte, sodium, 5G, data, artificial intelligence… Which European manufacturers will be at the starting line of this second phase of electric mobility?