Material Insights · Understanding the Material World

Battery cathode materials and Vehicles, ships, rail, aircraft

The cathode is the most expensive part of an EV battery cell and sets its range and cost, so carmakers' choice between nickel-rich NMC and cheaper iron phosphate (LFP) cathodes shapes both vehicle prices and metal demand. China makes almost all cathode material, and India's cell incentive scheme has so far delivered only a small part of its target.

Battery cathode materials (chemical) and Vehicles, ships, rail, aircraft (industry): 4 relationships.

How they are linked

1. Industry input

Physical flow · Strong · Cathode materials to vehicles, ships, rail, aircraft

The cathode holds the lithium and the metals that set a cell's energy density, so it is the largest single cost in an EV cell; the site rates cathode materials 5 of 5 on criticality for EV battery cell and materials makers.

  • 5 of 5 criticality for EV battery cell and materials makers
  • about 51% cathode share of EV battery cell cost, BNEF breakdown reported in 2022
  • 12% anode share of cell cost in the same breakdown

Because the cathode is about half of cell cost, swings in lithium, nickel and cobalt prices pass quickly into battery and vehicle costs. In the same breakdown, manufacturing and depreciation took about 24% of cell cost, so a cell maker that buys in its cathode has limited control over most of its cost base.

Enterprise types that depend on it:

  • EV battery cell and materials makers: core input (criticality 5 of 5)

Sources: Material Insights; MINING.COM (BNEF data)

2. LFP against NMC

Substitution · Rising · Carmakers choose between cathode chemistries

NMC and NCA cathodes give more range for a given battery size, while LFP is cheaper and uses no nickel or cobalt, so carmakers match chemistry to vehicle segment and price.

  • 60% NMC share of the EV battery market, 2022
  • nearly 50% LFP share of EV batteries deployed, 2024
  • over 55% LFP share of EV batteries deployed, 2025

LFP rose from just under 30% of EV batteries in 2022 to over 55% in 2025, led by Chinese carmakers; in 2022 about 95% of LFP batteries for electric light vehicles went into vehicles made in China. Outside China nickel-based chemistries such as NMC still made up almost 80% of batteries deployed in 2025, so the cathode mix varies sharply by market.

Sources: IEA; IEA

3. China's cathode dominance

Shared risk · Strong · Vehicle makers outside China rely on Chinese cathode supply

Almost all nickel-rich cathode is made in China, so carmakers elsewhere buy cells or cathode made there, or from plants that depend on Chinese supply.

  • 98% China's share of NMC cathode active material production, IEEFA 2026
  • close to 100% India's dependence on imported battery cells, 2025

India makes negligible cathode material, and most Indian firms import cells from China and assemble packs. A disruption in Chinese cathode or cell exports would therefore reach Indian EV production directly.

Sources: IEEFA

4. India's ACC PLI

Policy · High in India · Cell incentives aim to pull cathode making into India

India's production-linked incentive for advanced chemistry cells requires rising domestic value addition, which in time forces cell makers to source cathode and other materials locally.

  • ₹18,100 crore ACC PLI outlay for 50 GWh of cell capacity
  • 1.4 GWh (2.8%) capacity commissioned within the stipulated timeline, as of late 2025
  • 25% then 60% required domestic value addition within two and five years

Four firms, Ola Electric, Reliance New Energy, Hyundai Global and Rajesh Exports, were selected in the first round, and in the September 2024 round bidders took only 10 GWh, leaving 10 GWh unallocated. Delays have brought penalties: Ola's reached about ₹38 crore by 31 October 2025. Since the cathode is about half of cell cost, the 60% value addition target is hard to meet without domestic cathode.

Sources: IEEFA; MINING.COM (BNEF data)

For investors

Key learnings

  1. Cathode is about half of EV cell cost, so cathode chemistry and metal prices move vehicle battery costs more than any other input.
  2. The shift to LFP, over 55% of EV batteries in 2025, favours iron phosphate cathode makers, almost all in China, and reduces nickel and cobalt exposure for carmakers.
  3. India's cell scheme has commissioned only 2.8% of its target, so Indian EV makers will rely on imported Chinese cells and cathode for some years.

What to track

  • LFP share of EV battery deployments: Shows which cathode makers gain and how metal intensity changes (Monthly · industry trackers; annual · IEA Global EV Outlook)
  • Lithium carbonate and nickel prices: Drive cathode and cell cost for vehicle makers (Daily · LME and price reporting agencies)
  • ACC PLI capacity commissioned: Shows progress in Indian cell supply that will need local cathode (Quarterly · Ministry of Heavy Industries)

For policymakers

Key learnings

  1. Cell incentives alone do not localise the battery chain; with the cathode about half of cell cost, domestic value addition targets depend on cathode capacity.
  2. LFP cathodes use iron and phosphate rather than nickel and cobalt, which lowers mineral supply risk for countries without those mines.
  3. China's 98% share of NMC cathode production means battery supply security needs cathode and precursor plants, not only cell factories.

What to track

  • Domestic value addition reported by ACC PLI beneficiaries: Shows whether cathode and materials are being localised (Annual · Ministry of Heavy Industries)
  • India's imports of lithium-ion cells and cathode material: Falling imports show progress in localisation (Monthly · Ministry of Commerce trade data)

India

India makes negligible cathode material and imports close to all its battery cells, mostly from China; the ₹18,100 crore ACC PLI had commissioned 1.4 GWh of its 50 GWh target by October 2025.

Sources

  1. Vehicles, ships, rail, aircraft: materials, Material Insights (2026)
  2. Assessing India's ACC PLI scheme, IEEFA (2026)
  3. Breaking down the cost of an EV battery cell, MINING.COM (BNEF data) (2022)
  4. Global EV Outlook 2023: trends in batteries, IEA (2023)
  5. Global EV Outlook 2026: electric vehicle batteries, IEA (2026)