ELECTRIC vehicle (EV) manufacturers in China are seen turning to cheaper batteries to slash costs and meet the needs of drivers in its megacities who don’t need to travel huge distances.

There’s been resurgent interest in lithium-iron-phosphate (LFP) batteries since the middle of 2019 when China started to rein in subsidies that had spurred adoption of more expensive, longer-range units using materials such as nickel and cobalt. The cost-competitiveness, safety and low sensitivity to commodity price dynamics of LFP batteries are boosting their popularity in the country, according to a report by BloombergNEF.

China’s biggest maker of new energy vehicles, BYD Co., said its latest cobalt-free battery will be in a new sports utility model from the middle of this year. Its Han SUV — with range of more than 600 kilometers per charge — will use a LFP battery that matches the range of nickel-cobalt batteries, the company said.

“It’s simply because LFP batteries provide the best value,” said Gao Yuan, vice president of Chinese battery cathode producer Pulead Technology Co.

LFP batteries can be some 20 percent cheaper than those using nickel, according to Bloomberg New Energy Finance.

Nickel-rich batteries have been favored because they enable longer distances between charges — tackling so-called “range anxiety” that allegedly puts people off electric cars. Contemporary Amperex Technology Co. Ltd. and BYD have both developed new battery pack designs that can increase the driving range of vehicles using LFP, which improves the chemistry’s competitiveness, according to BloombergNEF.

“For megacity people, in Beijing, or in Shanghai, a 150-kilometer, driving range is often enough” and that can be served by LFP batteries, Gao said.

Still, the renewed interest in using LFP batteries may not prove permanent. Demand will rise in the medium-term, according to Morgan Stanley, but ultimately the technology will be replaced.(SD-Agencies)