1. Lower energy density and thus limited range
2. Slower charging times
3. Reduced performance in extreme temperatures

That is why LFP batteries were considered inferior to their NMC (Nickel Manganese Cobalt) counterparts. And why the European battery industry placed its bets on the latter, which offers higher energy density and better performance at extreme temperatures. On the downside, NMC batteries rely on costly and scarce materials like cobalt, nickel, and manganese which has made them increasingly expensive.

Meanwhile, Chinese brands made a different bet, seeing potential in the fact that LFP batteries are largely made from abundant and more affordable raw materials like lithium, iron, and phosphorous. The result was that Chinese manufacturers were able to dramatically improve LFP tech, solving its original challenges, while still keeping the cost low. As a result, Chinese companies like CATL, BYD, CALB en AESC have positioned themselves as the global battery suppliers of choice for many automakers, even European ones like Renault.

But the success of LFP batteries is a mixed blessing, juggling both advantages and challenges:

1. AFFORDABILITY: The cheaper LFP batteries could speed up the transition to green mobility movement, accelerating the shift away from fossil fuels. The price difference between NMC and LFP batteries has widened significantly, with LFP now up to 30% cheaper for similar performance. That’s how BYD is able to sell its Seagull EV for less than 10.000 euros in China.
2. DEPENDENCE: The rapid advancement of LFP technology creates a strategic vulnerability for European automakers who now heavily depend on Chinese suppliers for key components of their electric vehicles.
3. EUROPEAN BATTERY INDUSTRY COLLAPSE: European battery industry players like Umicore, who have greatly invested in the NMC technology, are now in a vulnerable position. And they will need to make huge investments if they want to start producing LFP technology.
4. RECYCLABILITY: The simpler, cheaper materials in LFP batteries make them less attractive for recycling compared to NMC batteries, which contain valuable metals like nickel and cobalt. As a result, recycling LFP batteries is often more costly than the value of the materials recovered, leading to concerns about the long-term environmental impact and the creation of toxic waste.

As with many new technologies, there are both advantages and drawbacks, but, yet again, we see a Europe that is falling behind and urgently needs to step up its game to regain relevance. Time for Europe to step up its game.

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