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Benchmark Mineral Intelligence: The west needs to build LFP battery capacity for the technology to go global

Tesla’s embrace of lithium iron phosphate (LFP) batteries has propelled the chemistry into the mainstream of the automotive industry. Automakers including Volkswagen, Daimler, and Ford have also adopted the cost-effective technology in their lower-range EVs.

However, more than 90% of the world’s LFP battery cell manufacturing capacity is based in China, according to Benchmark Mineral Intelligence’s Gigafactory Assessment. A global shortage of LFP cell capacity outside of China could hinder wider adoption by western automakers, Benchmark says.

Last month Gotion High-Tech agreed to supply a large listed and unnamed US automaker with 200 GWh of LFP batteries between 2023 and 2028 in an indication of the auto industry’s reliance on Chinese production.

In addition, rising lithium carbonate prices are adding to the costs of LFP batteries. Benchmark’s Lithium Carbonate, Battery Grade, EXW China price exceeded $40/kg or $40,000/tonne for first time last month.

Benchmark Mineral Intelligence’s latest Lithium Price Assessment on 31 December 2021 saw the high point of its lithium carbonate price range within China reach $41,925/tonne.

The mid point of the assessment for this specific grade settled at $39,250/tonne, up by 485.8% on prices a year prior.



Not entirely sure why the price of lithium carbonate is singled out for LFP costs, because it applies equally to all chemistries.

That said, the article is still largely correct. China owns the processing of pretty much the vast majority of LFP. The west, if it is serious about competing in the low end materials markets, needs to start from the mine to the raw refined LFP. Without controlling the sourcing, it will never be able to compete on supply. This isn't a battery production issue, it is a raw materials strategy one.


Capital wants the highest return

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