The Electric Flash Analysis: Elon Musk’s Shift to Iron-Based Batteries Will Upend EV Industry
Happy Monday!
The first three issues of The Electric said the electric vehicle industry would likely shift to cheap lithium-iron-phosphate (LFP) batteries. Tesla CEO Elon Musk just made it official.
Musk said in an earnings conference call on Monday that he ultimately expects most of his electric vehicle and stationary Powerwall batteries to be powered by LFP, a move that represents a sharp turn from nickel-based batteries that dominate the industry. The statement is the first confirmation by a major EV manufacturer of LFP’s ascendance but is especially important coming from Musk, whose decisions tend to strongly influence other automakers.
The switch to LFP has both industrial and geopolitical implications. It jeopardizes billions of dollars of investments and plans by battery and carmakers whose products use nickel-manganese-cobalt (NMC) and nickel-cobalt-aluminum batteries (NCA). In a battery market currently dominated by China, it also provides an opening for Europe and the U.S. to quickly make plans for their own LFP battery factories.
In recent weeks and months, Ford, VW and Stellantis have all said they intend to use LFP for entry-level cars, but none went as far as Musk. In his remarks, Musk didn’t specify a timeframe but said he expects two-thirds of Tesla’s vehicle batteries to be LFP-based and one-third to be nickel-based—the latter for long-range vehicles. He said 100% of Tesla’s stationary storage business—namely, its home Powerwall batteries for storing solar energy—would turn to LFP. Currently, much of Tesla’s Model 3 and Y vehicles made for the Chinese market have LFP batteries, while almost all Teslas sold elsewhere in the world are equipped with nickel-cobalt-aluminum batteries, which are similar to NMC.
Musk also gave a signal for his thinking on cell-to-pack technology, in which battery costs are dramatically cut and energy density increased by doing away with much of the packing material that currently goes into battery packs to keep them from catching fire. The July 25 issue of The Electric forecast an industry shift to cell-to-pack. Musk on Monday said he is contemplating a cell-to-pack structure for nickel-based batteries, but not LFP.
Musk’s comment came during a discussion of Tesla’s previously announced shift to ultra-large cylindrical batteries, known as 4680s. At Tesla’s Battery Day presentation last September, Musk described the 4680s as fitting into the actual frame of the vehicle—his version of cell-to-pack. On Monday, Musk said he expected the cell-to-pack 4680s to be used only for nickel-based batteries. That means his LFP batteries will probably be used in some other format, such as a 2170 cylindrical or a prismatic cell.
About The Electric
An exclusive premium service covering the nascent battery and electric vehicle revolutions.
About Steve LeVine
Steve LeVine is editor of The Electric. Previously, he worked at Axios, Quartz and Medium, and before that The Wall Street Journal and The New York Times. He is the author of The Powerhouse: America, China and the Great Battery War, and is on Twitter @stevelevine
Steve LeVine is editor of The Electric. Previously, he worked at Axios, Quartz and Medium, and before that The Wall Street Journal and The New York Times. He is the author of The Powerhouse: America, China and the Great Battery War, and is on Twitter @stevelevine