[Editor’s note: “This Little-Known EV Battery Technology Will Drive the EV Revolution” was previously published in July 2022. It has since been updated to include the most relevant information available.]
You may think that you know every battery innovation, especially as a student of innovation. But a secret EV battery technology you’ve probably never heard of could be a key driving force in the next chapter of the electric vehicle revolution.
Here’s the thing about EVs. Everyone wants to drive one these days. But for all the talk of falling prices, they’re still insanely expensive.
The battery I am talking about will fix this problem.
This battery holds the key to making a sub-$20,000 electric car that could fundamentally accelerate the EV revolution. Finally, anyone who wants to drive an electric car could afford one.
In fact, this battery is a complete game changer.
And it’s not just a concept or a science project stuck in research labs. This battery is already being used in cars today.
It’s ready to change the world in 2022, not 2023, 2024 or 2025. It’s ready to change the world at the moment.
I’m talking about LFP — Lithium Iron Phosphate Batteries.
Battery chemistry 101
A typical battery consists of three things: an anode, an electrolyte, and a cathode. Batteries work by promoting the flow of ions from the anode, through the electrolyte, and to the cathode when in use. When batteries are charged, the ions flow back through the electrolyte to the anode.
EV batteries – the most common being lithium-ion batteries – work the same way.
Lithium ions are stored in the anode. When driving the car, the lithium ions flow through the electrolyte of the car battery into the cathode. When charging the car, the same lithium ions flow back from the cathode to the anode.
Given this chemistry, we can easily see why a lot of resources are devoted to it Cathode Innovation. The cathode is where lithium ions flow when an electric vehicle is powered. So the better this cathode “absorbs” these lithium ions, the longer the battery lasts and the longer the electric vehicle runs.
In other words, the absorption properties of the cathode determine the range of an electric vehicle. Higher cathode absorption leads to longer driving ranges. Lower cathode absorption results in shorter driving ranges.
Therefore, this is one of the most critical issues in EV battery science Optimization of the absorption properties of the cathode. The best way to do this is by changing the composition of different metals in the cathode.
In decades of research, every metal composition in the cathode has been tested. And one concludes that there are two types of dominant cathode compositions that produce the best types of lithium-ion batteries.
One of these compositions is talked about all the time. The other is rarely mentioned. But the underestimated keeps them groundbreaking breakthrough which, according to my analysis, is the key to making an electric car under $20,000.
The two main types of EV batteries
The two predominant chemistries of lithium-ion batteries are nickel-manganese-cobalt (NMC) and lithium iron phosphate (LFP) batteries.
The two are very similar. Both work by promoting the flow of lithium ions. Both have graphite anodes. And both have the same electrolyte solutions.
The difference between LFP and NMC batteries lies in the cathode composition. NMC batteries use a combination of nickel, magnesium and cobalt in the cathode. LFP cathodes are a mixture of iron and phosphorus.
For various chemical-technical reasons, NMC batteries have higher absorption properties than LFP batteries. In short, NMC cathodes absorb lithium ions better than LFP cathodes. And consequently, NMC batteries are significantly more dense. In particular, they have an approximately 30% higher energy density.
This basically means that EVs with NMC batteries weigh less, can travel further and charge faster than EVs with LFP batteries. In short, when it comes to electric vehicles, NMC batteries have higher performance qualities than LFPs.
For this reason, NMC batteries have become the gold standard in electric vehicles. Range, charging times and vehicle weight have been major limiting factors for electric vehicles for years. So, companies like Tesla (TSLA) used NMC batteries to solve these problems. Over 80% of all EV batteries today are NMC or NMC-related batteries. LFP batteries make up less than 15% of all EV batteries today.
However, as you can see below, LFPs are expected to significantly expand the EV battery market share over the next five years. Why?
NMC batteries have their own disadvantages. And they are acutely challenged in today’s global economic environment with supply bottlenecks and high costs.
As a result, LFP batteries – not NMCs – will be the big driver of the next wave of the EV revolution. This has huge investment implications.
LFP is ready to change the world
In short, NMC batteries are absurdly expensive. And in an inflationary environment, consumers are optimizing cost over performance. Therefore, car manufacturers are switching from NMC to LFP batteries.
The science here is pretty simple.
That “C“ is in NMC Cobalt, this is a rare earth metal. By definition, there isn’t much cobalt on the planet. Our research indicates that there is less than 10 million tonnes of cobalt worldwide. And half of it comes from the Congo. In many cases, extracting cobalt requires expensive efforts, deforestation, habitat destabilization, and more. As a result, cobalt is absurdly expensive (more than $30,000 a ton). And it’s subject to volatile supply disruptions, making NMC batteries inherently expensive and short supply.
LFP batteries do not have these problems.
That “f“ in LFP batteries stands for Iron. Unlike cobalt, iron is abundant. About 5% of the earth’s crust consists of iron. There is 180 billion tons of iron on the planet. And while places like Australia have particularly large concentrations, there’s a little bit of iron everywhere. As a result, iron prices are a fraction of cobalt prices at just $90 per tonne.
In other words, LFP batteries may have lower energy densities than NMCs. But they are also much cheaper — about 40 to 50% cheaper.
The affordability factor
In 2018 and 19, electric vehicles achieved less than 200 miles of range per charge. There were very few charging stations on the streets. Inflation was below 2%. And consumers wanted powerful electric vehicles.
In 2022 the situation looks completely different. Electric cars (even LFP-powered ones) achieve well over 250 miles of range per charge. Electric vehicle charging stations are everywhere. And inflation is close to 10%.
In this world, consumers don’t really care about high-performance electric vehicles. You want affordable ones.
LFP batteries are the key to affordable electric vehicles.
For this reason, almost all major EV manufacturers have been looking for ways to use more LFP batteries in their EVs over the past year.
This is not to say that LFP batteries will kill NMCs. But we are now entering a new era of LFP and NMC coexistence. The former serves as the de facto battery for economical electric vehicles, the latter for the premium EV market.
The investment opportunity here is quite simple.
If you look at the big EV stocks today – Tesla, Clear (LCID), Rivian (RIVN) etc. – they all make premium electric vehicles. But the next wave of the EV revolution will be powered by cheap electric vehicles. Who is going to build all these affordable cars?
The answer: Find the company that masters LFP battery technology.
The final word on an EV battery breakthrough
I believe that the company that will master LFP battery technology and sell the most popular affordable electric car on the market hasn’t even made an electric vehicle yet. In fact, it hasn’t even announced an EV yet.
I’m talking about Apple (AAPL).
Yes, this Apple – the maker of iPhone, iPad, Mac and Apple Watch.
Apple has reportedly been working on an electric Apple Car for years. The company has not officially announced anything yet. But in the last two years, the rumor mill has accelerated significantly. Now, many analysts, investors, and enthusiasts are taking it for granted that Apple will launch its electric vehicle by 2024.
Considering Apple’s success with almost every product it’s released in its 40-year history — and the amount of resources it has reportedly poured into this project — I think the odds are high, that the Apple Car will be a great success.
So what is the connection to LFP batteries?
Well, one of the rumors floating around about the Apple Car is this Apple will use LFP batteries to power it. The company wants to make an electric vehicle that, like the iPhone, is cheap enough to be ubiquitous.
The only way to do that? LFP batteries.
That’s why I think the company that will drive the next leg of the EV revolution is one that hasn’t even made an electric vehicle yet: Apple. And that’s going to be the main reason why we’re going from ~10% EV penetration to over 50%.
This is exciting news. But that’s not all…
I spotted one tiny $3 stock which, according to my analysis, could be the supplier of the most mission-critical technology for the Apple car.
If I’m right about the Apple Car being a big hit, then it is could rise up to 40X from current levels.
We discuss this stock’s catalyst at length in my newsletter Investing in Hypergrowthwhere you can find out how to invest in this groundbreaking stock.
At the time of publication, Luke Lango held no position (neither directly nor indirectly) in the securities mentioned in this article.