Europe’s transition to mass-market electric vehicles is being driven largely by advances in lithium-iron phosphate (LFP) battery technology, which offers safety, affordability and the elimination of certain environmentally and socially problematic minerals such as cobalt and nickel. On average, LFP battery packs now cost around $94 per kWh—compared with roughly $130 per kWh for nickel-rich NMC chemistries—and recent improvements have pushed energy density above 200 Wh per kg. As a result, many automakers are incorporating LFP cells into more affordable EV models.
Despite growing demand, more than 99% of LFP cells and cathode active material were produced in China in 2024. This concentration of manufacturing presents a strategic vulnerability for the European Union, where local production of comparable battery chemistries has remained limited. Yet over 40% of all EVs sold in 2024 were equipped with LFP batteries, and forecasts suggest that share could rise to nearly 60% by 2030. Within the EU market, nearly every model priced under €25,000 this year relies on LFP chemistry.
To capture value and reduce dependence on external suppliers, industry experts recommend that European policymakers and manufacturers adopt a coordinated approach to onshore both cell production and active-material processing. Several local initiatives are already under way—ElevenEs in Serbia and Inobat in Slovakia are exploring LFP cell assembly, while major automakers’ battery divisions such as PowerCo and ACC are evaluating shifts toward LFP capacity. Public-sector instruments including the EU Battery Fund, state aid measures and European Investment Bank programs should support a balanced portfolio of battery projects across all chemistries, with a particular emphasis on establishing midstream production of lithium-iron phosphate.
Environmental and recycling considerations also warrant close attention. LFP batteries can be recycled, but commercial-scale operations are not yet fully established. European firms like Cylib are developing processes for recovering valuable materials such as graphite, the heaviest component in LFP cells. Under the EU Batteries Regulation, binding recycling targets will apply to all battery chemistries, with LFP packs required to meet collection and recovery requirements by 2030. Maintaining that deadline is seen as crucial to creating a viable business case for large-scale recycling and ensuring sustainable end-of-life management.
By embracing LFP innovation and deploying targeted industrial policies, Europe can strengthen its EV supply chain, enhance sustainability and secure its share of the growing global battery market.
Source: Transport & Environment
