# Lithium iron phosphate batteries and Nickel-rich lithium-ion batteries LFP and NMC are the two main lithium-ion chemistries and compete for every EV and storage project: LFP is cheaper and longer lived, NMC stores more energy per kilogram. LFP passed half of EV batteries in 2024 and over 55% in 2025, while NMC holds premium cars and most markets outside China. Source page: https://www.materialinsights.org/links/lithium-iron-phosphate-batteries-and-nickel-rich-lithium-ion-batteries/ [Lithium iron phosphate batteries](https://www.materialinsights.org/energy/e_li_lfp/) (energy) and [Nickel-rich lithium-ion batteries](https://www.materialinsights.org/energy/e_li_nmc/) (energy): 4 relationships. ## How they are linked ### 1. Rival chemistries *Substitution · Strong · LFP takes share from NMC* Both are lithium-ion cells with graphite anodes that differ in cathode, so a cell maker or carmaker can choose either for many uses. - **over 55%** LFP share of EV batteries worldwide, 2025 - **almost 80%** nickel chemistries' share of EV batteries outside China, 2025 LFP rose from nearly half of EV batteries in 2024 to over 55% in 2025, led by China. In the United States the LFP share almost halved in 2025, and in the EU it stayed just above 10%, so the contest is still open outside China. Sources: [IEA](https://iea.org/reports/global-ev-outlook-2026/electric-vehicle-batteries) ### 2. Cost gap *Cost and price · Strong · LFP undercuts NMC* LFP cathodes use iron and phosphate instead of nickel and cobalt, so LFP cells cost less per kWh and their cost swings less with metal prices. - **USD 81 per kWh** average LFP pack price across all segments, 2025 - **USD 128 per kWh** average NMC pack price, 2025 - **more than 40%** LFP packs cheaper than NMC on average, 2025 Stationary storage packs fell to about USD 70 per kWh in 2025, 45% less than in 2024, and LFP made up over 90% of stationary storage installations that year; the IEA notes that this storage mix explains part of the average gap. The cost gap is why LFP dominates storage and cheaper EVs, and why higher nickel or cobalt prices push more buyers to LFP. Sources: [IEA](https://iea.org/reports/global-ev-outlook-2026/electric-vehicle-batteries); [BloombergNEF](https://about.bnef.com/insights/clean-transport/lithium-ion-battery-pack-prices-fall-to-108-per-kilowatt-hour-despite-rising-metal-prices-bloombergnef/) ### 3. Range against cost *Substitution · Asymmetric · NMC still needed for high energy density* NMC stores more energy per kilogram, so LFP replaces it easily where weight and range matter less, but not in long-range or premium vehicles. - **265 Wh/kg** NMC cell energy density - **up to 205 Wh/kg** latest LFP cell energy density Improvements in LFP cells and pack design have narrowed the gap enough for mid-range cars. The substitution runs mostly one way: LFP took over 90% of stationary storage installations in 2025, while premium and long-range EVs still rely on NMC. Sources: [IEA](https://iea.org/reports/global-ev-outlook-2026/electric-vehicle-batteries) ### 4. China makes both *Geography and ownership · Strong · Both chains centred in China* China built most of the world's cell and cathode capacity for both chemistries, so diversifying away from it is harder for LFP than for NMC. - **over 80%** China's share of world battery production, 2025 - **6% to 7%** EU and US shares each of world lithium-ion battery manufacturing capacity, 2025 Production of LFP cathode materials and their precursors is still almost entirely in China, while almost 80% of EV batteries outside China used nickel chemistries in 2025, so the chemistry split partly follows geography. Sources: [IEA](https://iea.org/reports/global-ev-outlook-2026/electric-vehicle-batteries) ## For investors ### Key learnings 1. LFP packs were more than 40% cheaper than NMC on average in 2025, which has won LFP most of the EV market and over 90% of stationary storage installations. 2. NMC keeps a niche defined by energy density, 265 against up to 205 Wh/kg, which LFP improvements keep eroding. 3. Because LFP cathodes are almost all made in China, the chemistry split also decides who captures cell and cathode margins. ### What to track - **LFP and NMC shares of battery deployment**: A rising LFP share cuts demand for nickel and cobalt (Yearly · IEA Global EV Outlook) - **Pack price gap between NMC and LFP**: A wider gap speeds switching to LFP (Yearly · BloombergNEF) - **Cell energy density announcements by chemistry**: LFP gains extend its reach into longer-range cars (As announced · cell makers) ## For policymakers ### Key learnings 1. LFP needs no nickel or cobalt, so countries short of those metals can find it easier to supply securely, but its cathode know-how sits in China. 2. Outside China almost 80% of EV batteries used nickel chemistries in 2025, so policies favouring non-Chinese supply chains tend to favour NMC for now. 3. Battery plans should not lock in one chemistry, since shares have moved several points a year. ### What to track - **Chemistry choices in domestic cell projects**: Shows which minerals and cathode imports a country will need (Yearly · industry ministries) - **China's share of cell and cathode production**: Signals whether supply concentration is easing (Yearly · IEA) ## India Under India's cell incentive scheme Ola Electric mainly targets NMC and Reliance's planned plant is listed as LFP; with cell imports still close to 100%, the chemistry split decides whether India mainly imports Chinese LFP cells and cathodes or also needs nickel and cobalt. ## Sources 1. [Global EV Outlook 2026: Electric vehicle batteries](https://iea.org/reports/global-ev-outlook-2026/electric-vehicle-batteries), IEA (2026) 2. [Lithium-ion battery pack prices fall to $108 per kilowatt-hour despite rising metal prices](https://about.bnef.com/insights/clean-transport/lithium-ion-battery-pack-prices-fall-to-108-per-kilowatt-hour-despite-rising-metal-prices-bloombergnef/), BloombergNEF (2025) 3. [Assessing India's ACC PLI scheme](https://ieefa.org/sites/default/files/2026-01/Assessing%20India%27s%20ACC%20PLI%20scheme.pdf), IEEFA and JMK Research (2026)