The global shift to lithium iron phosphate (LFP) batteries is accelerating faster than predicted, driven by plunging costs and surging demand for grid-scale energy storage—a trend that’s hammering nickel and cobalt markets while reinforcing China’s stranglehold on battery production.
Why LFP Batteries Are Winning
🔋 Cost Crash: Prices for LFP batteries halved in 18 months, making projects like Fidra Energy’s £600M UK storage facility viable.
⏳ Longer Lifespan: New LFP units last 20 years (vs. 10–15 previously), slashing long-term costs.
🌍 Ethical Edge: Avoids cobalt’s human rights concerns (DRC mines) and nickel’s carbon footprint (Indonesian smelters).
Market Fallout for Nickel & Cobalt
📉 Price Collapse:
- Nickel prices halved since 2021; cobalt down 60%.
- CRU data shows nickel use in batteries fell 33% since 2020; cobalt plummeted 67%.
🏭 Overcapacity Crisis: Mines in Indonesia (nickel) and DRC (cobalt) face glut as EV demand slows outside China.
Energy Storage vs. EVs: The Demand Shift
🚗 EV Slowdown: Growth cooled to 23% in 2023 amid high costs and charging gaps.
⚡ Storage Surge: Capacity jumped 51% last year; UBS predicts 34x growth by 2050.
🔋 LFP Dominance: Now 20% of global battery demand (Rho Motion), favored for storage and Chinese EVs (e.g., BYD).
Geopolitical Battles
🇨🇳 China’s Iron Grip: Produces 90% of U.S. storage batteries, unaffected by Trump’s 41% tariffs (so far).
🇺🇸 U.S. Struggles: LG Energy Solution abandons nickel-based EV batteries to pivot to LFPs—but can’t match China’s scale.
🇪🇺 Europe’s Dilemma: Fidra’s UK project uses Chinese Sungrow batteries; net-zero goals may override “de-risking” rhetoric.
What’s Next?
- Lithium’s Mixed Fate: Despite LFP growth, oversupply has crushed prices (down 20% in 2024).
- Nickel/Cobalt Survival: Some high-end EVs (e.g., Tesla Cybertruck) still need nickel, but market shrinkage looks inevitable.
- Storage Gold Rush: Projects like Thorpe Marsh (1.45GW) will multiply, but tariff uncertainty clouds U.S. growth.