By FREDA LEWIS-STEMPEL
Two major car manufacturers have revealed they're producing new, cheaper EV batteries that will help reduce the price of electric cars in the coming years.
Volkswagen and America's General Motors - which owns Cadillac and Chrysler - both say they have developed EV batteries that use less expensive, and fewer, precious metals without compromising efficiency or range.
Volkswagen will start to use lithium-iron-phosphate (LFP) batteries that are cheaper than the nickel-manganese-cobalt (NMC) packs the firm currently uses in its EVs, while GM will use lithium manganese-rich (LMR) prismatic battery cells.
Both reduce battery cost of production by using less cobalt and nickel - some of the most expensive raw materials used in EV batteries.
VW will make the change in its forthcoming ID.2 supermini model - the first to use its new MEB Plus platform - while GM is aiming to bring in its LMR batteries for 2028.
Volkswagen told Auto Car that the new battery developments will take 'a major step forward in cost', while GM said its will make EVs 'affordable'.
This follows Ford's announcement last month that it has also developed its own LMR battery to use by the end of the decade.
Cheaper EV batteries: VW will use new, cheaper lithium-iron-phosphate (LFP) batteries in its new ID.2 supermini EV, and future models
Speaking to Auto Car, Volkswagen confirmed it begins transitioning all its electric cars to an updated platform next year to adopt this new, cheaper battery type.
The VW ID.2 supermini electric car is set to arrive in 2026, and will be VW's cheapest EV model costing around £22,000.
It can accommodate the new LFP battery because it's built on VW's update MEB Plus platform. The rest of Volkswagen's EVs will then move onto the MEB Plus platform and use the LFP battery.
Thomas Schäfer, VW chief executive, told Auto Car: 'The upgrade to MEB Plus comes next year, and we will roll out the cell-to-pack battery systems with LFP.
'That will be a major step forward in terms of cost for us. It's very important, and also in performance.
'We're very happy with that. It's all in plan. We will come in with MEB Plus across the models, including ID 3, ID 4, ID 7. They will have LFP.
'You can see this move towards LFP across the board, really, except for performance applications on the upper end. In the volume game, LFP is the technology.
'It will start with ID 2 and then roll out through the models.'
While GM's battery makeup is different to VW's – GM uses lithium manganese-rich (LMR) prismatic battery cells - the reason for cost reduction is the same: LMR batteries use less cobalt and nickel, instead increasing the quantity of more common, less expensive minerals like manganese.
And GM has said it is pioneering the new 'groundbreaking' EV battery technology to boost profitability of large electric SUVs and trucks.
Kurt Kelty, GM vice president of battery, propulsion and sustainability told media at an event in the US that: 'LMR unlocks the premium range and performance at an affordable cost.'
Although GM is a stateside manufacturer, it shows the move by big car makers across the globe to push EV battery prices down.
GM's new 'groundbreaking' lithium manganese-rich (LMR) prismatic battery cells use less nickel and more manganese to reduce the costs of battery production
Ford has also recently said it is switching to LMR batteries by 2023 to bring down EV costs of production and give customers cheaper ECVS
Ford is another manufacturer that has said it will switch to LMR batteries in the next few years.
In April, Ford revealed it has developed a 'game-changing' LMR battery at its Ion Park battery research and development center in Romulus, Michigan, which it claims will improve safety and stability, and increase range compared to high-nickel batteries.
Most importantly for the customer it will reduce the cost of EVs.
Ford's electrified propulsion engineering chief Charles Poon said in a post on LinkedIn that Ford is expecting 'unprecedented' cost reduction with the LMR battery, and that the breakthrough was critical to achieving 'true cost parity' with combustion cars.
He posted: 'This isn't just a lab experiment. We're actively working to scale LMR cell chemistry and integrate them into our future vehicle lineup within this decade.'
The benefit of LFP or LMR batteries is that they don't contain nickel or cobalt, or at least far less than traditional EV batteries do.
Not only does this reduce environmental concerns from mining, but it significantly reduces the costs of production.
BloombergNEF's analysis has found that LFP cells are 32 per cent cheaper on average than traditional NMC cells.
Electric car manufacturer Rivian said that it had seen savings of 20 to 30 per cent thanks to LFP.
LFP batteries also have a longer lifespan because they are more resilient, which means they can handle more charge-discharge cycles before losing capacity.
GM's LMR batteries use 50% less nickel (one of the most expensive EV battery materials) than a traditional NMC battery, massively reducing production costs
In the same vein, LMR batteries have a lower cost of production because they use much less nickel.
In fact, GM broke down the difference between a typical high nickel battery and its new LMR battery.
With a typical high nickel battery cell, the chemical composition is roughly 85 per cent nickel, 10 per cent manganese and five per cent cobalt, GM explains.
Comparatively composition of LMR cells is around just 35 per cent nickel, 65 per cent manganese, and virtually no cobalt.
Manganese is cheaper and more plentiful than either nickel or cobalt so the material in these cells is much less expensive.
The chemistry also lends itself well to larger cell sizes, which further reduces system cost, with fewer connective and structural elements in a battery pack.
Mercedes new EV, the CLA, is the same price as the combustion model because Mercedes has managed to reduce cost of production, specifically 30% on battery costs
This is Money recently revealed how battery costs are falling, contributing to the trend for cheaper new EVs.
Lithium-ion batteries have always been one of the most significant costs of manufacturing an EV, but BloombergNEF's annual battery price survey last year found that their costs are down 20 per cent.
And Goldman Sachs Research forecasts that next year battery prices could drop 50 per cent from 2023 - the moment they'd achieve near ownership cost parity with ICE cars.
Using cheaper materials, such as nickel and cobalt substitutes, or less of these expensive metals is helping.
The uptake of lithium iron phosphate (LFP) by brands like VW, which are more affordable, has also driven prices down.
Mercedes put these savings into context when it unveiled its new CLA EV.
The German marque confirmed that the circa £40,000 EV will be able to be priced the same as the hybrid version.
Why? Because battery production costs have fallen by 30 per cent. And this has reduced the EV's overall cost by 15 per cent.
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