Stellantis will use cheaper LFP batteries for EVs in Europe

Stellantis plans to roll out electric vehicles in Europe with cheaper lithium iron phosphate (LFP) batteries.

European automakers are currently using the more power dense, but costlier, NMC cell chemistry (nickel, manganese and cobalt). However they facing increasing cost competition from rivals using Chinese-sourced LFP batteries.

“We need LFP and we will have LFP because it’s a cost competitive position to make affordable cars for the middle classes,” Stellantis CEO Carlos Tavares said on an earnings call on Wednesday.

Tavares did not give a timeframe for when the batteries will appear in EVs sold bz Stellantis brands, which include Peugeot, Citroen, Opel and Fiat.

He said the “only question” is where the batteries would be sourced, either from Europe or from elsewhere.

Stellantis will source standard NMC batteries from three planned battery plants in France, Germany and Italy through its ACC joint venture with Mercedes-Benz and TotalEnergies.

The first plant, in Douvrin, France, will start building prototypes in the second half of this year with full production starting in 2024, Tavares said on the call.

LFP is seen as giving a useful cost advantage in a period of high battery material prices because of its lack of costly nickel, cobalt and manganese.

Tesla uses LFP batteries bought from Chinese specialist CATL for its standard range Model 3 sedan and Model Y sedan, both of which were subject to price cuts of up to 15 percent at the beginning of the year.

The chemistry is also used by Chinese premium brands Xpeng and Nio, as well as growing volume brand MG.

MG, owned by China’s SAIC, installs LFP batteries in entry-level versions of its new MG4 compact, a rival to the VW ID3 and Peugeot e-208.

China dominates LFP production and it is set to produce 99.5 percent of global supply this year, according to battery materials analyst company Benchmark Minerals.

China will account for 97 percent of planned LFP capacity up to 2030, the company has estimated.

CATL is expanding into Europe and started preproduction at its 14-gigawatt-hour plant in Erfurt, Germany, late last year.

The company plans to install six battery cell production lines there by the end of 2023.

CATL did not reveal the chemistry of the battery it will make there.

Stellantis has been linked to a second CATL plant to be built in Debrecen, Hungary, with production scheduled to begin after 2025.

Mercedes will be its first customer, with Volkswagen Group and BMW also sourcing batteries from the plant.

No chemistry has been announced for the batteries planned at the factory.

Ford in the U.S. has partnered with CATL to build a new $3.5 billion LFP battery plant in Michigan which opens in 2026 with capacity to produce enough batteries to power 400,000 Ford models a year.

Ford has estimated that LFP will help it make savings of between 10 to 15 percent compared to NMC batteries.

The U.S. automaker has said it will start using imported LFP batteries in its Mach-E model from the spring onward.

UBS and P3 Automotive last year conducted a teardown of the CATL LFP battery used in the Tesla Model 3 and concluded it was a global cost leader at a cell price of $131 (123 euros) per kilowatt hour, ahead of the BYD ‘Blade’ LFP battery, which cost $134 per kWh.