[Bojo, Battery] Developed and Abandoned by the US... The Irony of 'Cheap Battery' Through the Ages

20% Lower Price and Improved Energy Density
LFP Gains Attention Amid 'Battery Bottleneck'
Rising Even in North America, Expected to be NCM's Solo Stage
Projected 40% Electric Vehicle Adoption by 2030

Editor's Note'Bojo, Battery' is a series that takes a closer look at the battery industry, which has emerged as the center of next-generation advanced industries. It examines the agile movements, strategies, and conflicts among governments and companies worldwide vying to dominate the battery manufacturing ecosystem. We will also cover the technological competition to create safer and longer-lasting batteries. We aim to serve as an 'assistant' to readers and investors by enhancing and supporting their understanding of the battery industry. We will share battery stories that are easy to approach.

LG Energy Solution ESS LFP pouch cell. Photo by LG Energy Solution

The North American market, once expected to be the exclusive domain of Korean battery companies' mainstay NCM (Nickel-Cobalt-Manganese) batteries, is now experiencing a strong surge in LFP (Lithium-Iron Phosphate) battery demand. Plans for mass production of LFP batteries and electric vehicles are emerging one after another in response to this growing demand.

On the 20th, BloombergNEF, an eco-friendly energy market research firm, forecasted that by 2030?six years from now?LFP battery demand will exceed 160 GWh and will be installed in 40% of new electric vehicles in the United States. Considering that 1 GWh corresponds to batteries for 12,000 electric vehicles, this means that LFP batteries will be applied to 1.92 million electric vehicles annually. BloombergNEF expects LFP batteries to maintain excess demand in the U.S. electric vehicle market during this period. Starting with Tesla, which actively adopts LFP batteries, leading automakers have either already adopted LFP batteries in their electric vehicles or plan to equip upcoming models with them. A representative from a Korean battery cell subsidiary in North America revealed, "When we explain our battery cell lineup to clients during meetings, many end by asking, 'Okay, but don't you have an LFP lineup?'"

Until just three to four years ago, it was rare to find electric vehicles equipped with LFP batteries in North America. The large-scale battery factories that the three major Korean battery companies plan to operate sequentially from 2025 mainly produce NCM-series batteries. LFP batteries were developed first in the U.S. but were abandoned due to difficulties overcoming energy density and other challenges. So why is the U.S. now seeking LFP batteries?

Why Has LFP Become the Trend in North America?

LFP batteries have drawbacks such as being heavy and having low energy density. For electric vehicles, where driving range and power output are crucial, it was considered advantageous to equip lighter batteries with higher energy density, even if they were somewhat more expensive. However, as competition in electric vehicle pricing intensifies and the market becomes more generalized, the price competitiveness of batteries?which account for over 40% of the cost of electric vehicles?has become increasingly important. LFP batteries are known to be about 20% cheaper in price and production costs compared to NCM batteries.

Battery performance has also greatly improved due to advancements in LFP technology. The energy density issue is being overcome through space technologies that add battery capacity, such as CTP (Cell-to-Pack) and CTC (Cell-to-Chassis), which skip the module or pack stages. Thermal management systems and additives have reduced the low-temperature driving range gap to within about 10%. Additionally, LMFP (Lithium Manganese Iron Phosphate) batteries, which mix manganese into lithium iron phosphate, are gaining attention as a new technology. They can increase energy density by about 15-20% at a price similar to LFP batteries, thereby extending driving range. Chinese companies such as CATL, BYD, and Guoxuan have developed LMFP-based batteries and have already entered the commercialization stage. Thanks to the increased energy density, electric vehicles equipped with LFP batteries now have a maximum driving range of 300-400 km, which satisfies the needs of the majority of car users.

Not only electric vehicles but also renewable energy projects are spotlighting LFP batteries. North America currently has large-scale renewable energy projects under construction and awaiting operation. Batteries are installed in ESS (Energy Storage Systems) in the renewable energy sector, where they are essential for storing energy to compensate for the intermittent production cycles of wind, solar, and other renewable energy sources. Due to their stable nature and lack of spatial constraints, LFP batteries are favored. According to a report by the Korea Trade-Investment Promotion Agency (KOTRA) titled 'U.S. Renewable Energy Market and Energy Transition Trends,' the share of renewable energy generation in the U.S. is expected to expand to 42% by 2050.

LFP Led by China... Will North America Be Different?

Which companies will dominate the North American LFP market? It is expected to differ from the situation where China monopolized the global LFP battery market centered on its domestic market. The U.S. has designated battery joint ventures with Chinese capital ownership exceeding 25% as 'Foreign Entities of Concern (FEOC),' excluding them from subsidies (tax credits) under the Inflation Reduction Act (IRA). Moreover, domestic battery companies and local U.S. firms are announcing plans for mass production of LFP batteries one after another.

LG Energy Solution began producing LFP batteries for ESS at its Nanjing plant in China at the end of last year and is building the first ESS-dedicated battery factory among battery companies in the U.S. The total investment is 3 trillion KRW. This factory, located in Arizona, plans to mass-produce 16 GWh of pouch-type LFP batteries starting in 2026. For automotive LFP batteries, the goal is to begin mass production in the second half of 2025, but the specific factory for production has not yet been disclosed.

Samsung SDI has set a goal to mass-produce LFP batteries for ESS in 2026. It is also preparing automotive LFP batteries, though the mass production timeline has not been announced; the industry expects it to be similar to the ESS schedule. Samsung SDI is developing affordable batteries with higher energy density than LFP but cheaper than ternary batteries like NMX (Nickel Manganese Oxide) or LMFP (Lithium Manganese Iron Phosphate). A Samsung SDI representative said, "Since domestic companies are latecomers in LFP batteries and China's price competitiveness is high, we are focusing on establishing another competitive edge to surpass that."

SK On has completed development of automotive LFP batteries and is in discussions with several clients. SK On CEO Lee Seok-hee told reporters at the InterBattery exhibition earlier this month, "Once specific negotiations with customers are completed, we expect to mass-produce around 2026," adding, "Considering the North American market, Korean battery companies can compete sufficiently with Chinese companies." At this year's InterBattery, SK On unveiled an LFP battery with over 10% improved charge-discharge capacity at low temperatures, and last year, it showcased the first pouch-type LFP battery among domestic battery companies.

Ford plans to operate its Michigan Marshall battery plant from 2026 using Chinese CATL's LFP technology. The new plant involved an investment of $3.5 billion (approximately 4.6896 trillion KRW). U.S. battery company ONE (Our Next Energy) plans to begin pilot production of LFP battery cells at its Van Buren Township plant, which has seen an investment of $1.6 billion (approximately 2.1438 trillion KRW), starting late last year.