Slate EV, while launching its first pickup truck, was kind enough to spill the beans on what kind of batteries it’s first vehicle is going to be using. Slate revealed that it’s batteries are going to be using the Nickel Manganese Cobalt (NMC) chemistry. We’ve written a lot about the different kinds of batteries and the numerous drawbacks of NMC.
In short, NMCs are an older technology, are more expensive, less safe (compared to LFP) but they offer a lot more energy density which is a great advantage. Lithium Ion Phosphate (LFP) batteries on the hand are cheaper, safer, more durable, and increasingly the global standard for affordable EVs, especially in China where companies like BYD dominate.
Both Tesla and Rivian have been trying to increase the share of LFP batteries in their vehicles.
And for a $20,000 EV pickup truck like Slate where every bit of savings goes a long way surely lithium-iron-phosphate (LFP) should have been their first choice.
But Slate didn’t go with LFP.
Instead, it chose NMCs. Why? Because they had no real choice.
Slate CEO Chris Barman explained that the decision came down to supply chain constraints tied to the federal tax credit rules. To qualify for the $7,500 federal incentive, an EV’s battery components and critical minerals must come largely from North America or U.S. free-trade partners.
Almost all LFP batteries and the underlying materials come from China. Therefore, using LFP batteries would have risked disqualifying the truck from tax credit eligibility killing its affordability.
In other words, even though LFP would have made Slate’s truck cheaper, America’s lack of LFP production forced Slate to use a more expensive NMC battery instead.
America’s Battery Manufacturing Problem
Slate’s situation highlights a much bigger issue facing the entire American EV industry:
The U.S. battery manufacturing sector simply isn’t ready to meet the needs of a mass-market EV future.
The U.S. barely manufactures any LFP batteries today. We have written about this extensively, but most American battery plants, from Tesla’s Gigafactory with Panasonic, to GM and LG’s Ultium Cells joint venture, to SK On’s facilities supplying Ford, focus primarily on NMC or NCMA (nickel-cobalt-manganese-aluminum) chemistries. These technologies were the best option a decade ago, offering high energy density for long-range EVs.
But the industry has evolved. Globally, manufacturers are increasingly shifting toward LFP because of the many reasons we’ve listed above. The big problem though is that China controls MOST of the LFP supply chain.
Here is an excerpt from the IEA –
Battery production in China is more integrated than in the United States or Europe, given China’s leading role in upstream stages of the supply chain. China represents nearly 90% of global installed cathode active material manufacturing capacity and over 97% of anode active material manufacturing capacity today. The only countries with significant shares of cathode active material manufacturing capacity outside of China today are Korea (9%) and Japan (3%). Different supply chains are, however, required for different chemistries.
China is home to almost 100% of the LFP production capacity and more than three-quarters of the installed lithium nickel manganese cobalt oxide (NMC) and other nickel-based chemistries production capacity, compared to 20% in Korea. LFP is the most prevalent chemistry in the Chinese electric car market, while NMC batteries are more common in the European and American electric car markets.
Some efforts are underway to catch up. Ford announced a licensing deal with CATL to build an LFP plant in Michigan. Our Next Energy (ONE), a U.S.-based startup, is trying to bring LFP and even more advanced chemistries to domestic production. But large-scale output is still years away.
Even retooling an existing factory to produce LFPs instead of NMCs is going to require hundreds of millions in incremental investment and the formation of new supply chains.
Until that happens, American EV makers who want to stay compliant with IRA tax rules are stuck using older, more expensive chemistries like NMC.
If there’s any lesson here, it’s that fixing EV affordability isn’t just about scaling car production. It’s about having access to batteries that are cheap, safe and accessible domestically.