Lithium iron phosphate (LFP) batteries are entering a golden development period in the European market with exceptionally bright prospects! Core drivers include cost advantages, policy support, and proactive transformation by European automakers. By 2030, LFP technology is projected to meet approximately half of Europe's total battery demand.

Market Demand and Policy Drivers

Regulatory Impulse: The EU's Battery and Waste Battery Regulation mandates carbon footprint declarations and digital battery passports. LFP batteries, free from precious metals like cobalt and nickel, offer superior recycling economics and advantages in low-carbon manufacturing.

Automaker Strategic Shifts: Industry giants including Volkswagen, Mercedes-Benz, and Stellantis have announced plans to adopt LFP for entry-level or mainstream models. ACC (Automotive Cells Company) has also suspended its ternary battery plant project to evaluate LFP technology instead.

Cost and Performance: LFP batteries cost 20%-30% less than ternary batteries while offering higher safety. The energy density gap is narrowing through technological iteration.

Industrial Layout and Supply Chain

‌European Local Production Capacity‌: The first GWh-scale LFP factory has commenced operations in Norway, with an annual capacity of 3 million battery cells (1GWh). By 2030, Europe's LFP demand is projected to exceed 750GWh.

‌Chinese Companies' Overseas Expansion‌: CATL, Guoxuan High-Tech, and Envision Power have announced plans to build factories or supply batteries in Europe to meet localized demand. For instance, Guoxuan High-Tech will supply LFP cells to Volkswagen from 2026 through 2032.

Challenges and Competitive Landscape

Recycling Economics: LFP recycling yields lower value than ternary batteries, but policy mandates (e.g., 65% lithium recovery rate by 2031) are driving recycling system improvements.

Competition from Ternary Batteries: Ternary batteries retain advantages in energy density and low-temperature performance, yet LFP continues to expand its market share driven by cost and safety considerations.

Conclusion

LFP holds promising prospects in the European market, fueled by cost advantages, policy support, and automaker strategies. In the coming years, with the ramp-up of local production capacity and the expansion of Chinese companies' footprint, LFP is poised to become one of the mainstream technologies for power batteries in Europe.