Lithium-Iron Phosphate Batteries and Norwegian Millionaires
Battery chemistry is a burgeoning industry, and with more and more companies seeking to make their name in the electric vehicle (“EV”) space, a market still in its relative infancy.
With increasing consumer demand and the greater availability of electric models, the number of electric cars in the UK, and developed markets more generally, is growing at a rapid rate. As of the end of February 2024, there are now over 1,000,000 fully electric cars on UK roads and a further 620,000 plug-in hybrids. 17.7% of all new car registrations were EVs, with this number expected to grow at a CAGR of c. 25% into 2025 and beyond.
What does this have to do with phosphate? Well, most auto manufacturers are starting to diversify away from nickel cobalt manganese (“NCM”) batteries. Despite these batteries having higher power ratings and energy densities, and superior cold weather performance, they do have disadvantages. Currently, the nickel and cobalt used in these batteries are in high demand, with limited supply, making them particularly expensive. It is also considered best practice to only charge NCMs to 80% capacity for an optimal lifetime.
Lithium-iron phosphate (“LFP”, with the F standing for Fe, or Iron) batteries, by comparison, can be charged to 100% repeatedly with no worry of battery health degradation, and so also have a much longer lifespan than NCMs, beneficial to the raging debate on the environmental impact of these batteries. Input raw materials are more readily available and so they are materially cheaper to produce. Lastly, they generate less heat, making them marginally more efficient and safer. Soaring demand for lower-cost electric vehicles will boost the popularity of LFP battery components.
How does this relate to Norwegian Millionaires I hear you ask? Norway has discovered a massive 77 billion-ton phosphate reserve, effectively doubling the world's supply of this super material. This equates to a mind-blowing $24 trillion in value! For context, that's more than the entire oil reserves of Saudi Arabia. Even after extraction, refining and shipping costs, with careful management this could be transformational for the Norwegian economy, as their oil and gas incomes run dry. Phosphate may not sound sexy, but it's crucial for fertilisers, electronics, solar panels and of course LFP batteries - powering the modern world. With the new phosphate discovery, the sovereign wealth fund of Norway could triple in size. On paper, making every citizen a millionaire.
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