LFP Tops Global EV Market in 2025 amid Regional Divergence

LFP kilowatt-hour (kWh) deployment in passenger and light duty EVs surpassed nickel-based chemistries for the first time in 2025. Over the first eleven months of 2025, LFP deployment in EVs grew 43%, outperforming the 8% growth experienced by nickel-based chemistries.

Naturally, the vast proportion of this growth came from China due to it being both the largest EV market globally and dominated by LFP since 2022. In the first eleven months of 2025, over 80% of EVs sold in the country had an LFP battery pack. The prominence of LFP in China is driven heavily by economics, with the chemistry being significantly cheaper than nickel-based alternatives due to cheaper raw material input costs. This does come with the trade-off of lower energy density and with that a smaller range than an equally sized nickel-based battery pack. However, the gap in energy density between LFP and mid-nickel chemistries, second in battery deployment in China and globally, is closing. With innovations in battery pack design, such as cell-to-pack, reducing inactive material in the pack.

LFP deployment in EVs sold outside China saw its greatest ever increase in 2025, with 66% growth over the first eleven months of the year. Europe and Asia, which account for more than 75% of LFP deployment outside China, have driven this increase after LFP deployment in both regions more than doubled. The expansion of Chinese vehicle manufacturers into overseas EV markets is driving LFP growth in not only these regions but most other regions globally. China has tight control over the global LFP supply chain and holds a strong strategic advantage due to being the first to commercially manufacture the chemistry. Consequently, since the start of 2018, over 95% of EVs fitted with an LFP battery were manufactured in China.

The growing presence of Chinese vehicle manufacturers outside China is being driven by the fiercely competitive EV price war within China, to which the increasing shift towards LFP has contributed. Chinese companies are looking towards overseas markets in an attempt to seek greater profitability than they enjoy in their domestic market. By 2030, BYD hopes for half of its total vehicle sales to come from markets outside China. In pursuit of this target, it has announced the construction of several EV production facilities, including sites in Hungary, Turkey, Brazil and Indonesia. BYD’s global expansion brings with it the global expansion of LFP due to its vertical integration as an LFP battery cell manufacturer, with all its vehicles being LFP since its transition to producing only EVs in 2022.

Increasingly, European vehicle manufactures are launching EVs equipped with an LFP battery, with LFP deployment by non-Chinese vehicle brands in Europe rising by 47% over the first eleven months of 2025 and LFP deployment in European made vehicles more than tripling. This is largely a consequence of European vehicle manufacturers releasing smaller, more affordable EVs as they seek to remain competitive against their Chinese counterparts and also to cater to European consumer preference which has historically favoured smaller segment vehicles.

At present, LFP cells used in European EV production are being imported from China. However, in 2026 several new LFP cell production facilities are scheduled to start production in Europe including CATL and Envision AESC sites in Spain, and an EVE Energy facility in Hungary. A number of other new facilities are scheduled to begin production in 2027 and 2028. The introduction of LFP cell production in Europe will undoubtedly aid the movement towards price parity between EVs and their conventional vehicle counterparts. With a large and distinct price disparity between the two currently a significant barrier to higher levels of EV adoption in the region.

While LFP deployment is rising, and set to continue on that trend, in Europe, the opposite is true of North America. It was the only region to experience a decrease in LFP deployment in 2025, with a contraction of over 40% in the first eleven months of the year. Tesla underpinned this decrease after it ceased production of the LFP base variant of the Model 3 in the USA in the second half of 2024. The model’s ineligibility for the IRA’s 30D federal tax credit was a key driving force behind its discontinuation with Tesla unable to source LFP cells from outside of China due to China’s strong hold over the LFP supply chain.

The USA’s protectionist trade policies have been central in keeping LFP out of the North American EV market. In May 2024, the USA announced a 100% tariff on Chinese made EVs, a measure that was followed by Canada in August 2024. In April 2025, President Trump significantly increased the tariff on Chinese battery cells. A consequence of which is to limit the presence of LFP in the USA through increasing the cost of LFP as a component in domestic vehicle production. There are a handful of EV models made in the USA currently using LFP, such as variants of Rivian’s models, although such examples are rare, and total market share remains at just 1%.

The mass introduction of LFP into the North American market has seen a further step back through the abolition of federal tax credits supporting EV adoption at the end of September 2025. As well as through decisions to reset the US Corporate Average Fuel Economy (CAFE) standards to levels seen before the Biden Administration and to reduce the fines for violating the CAFE standards to zero. The relaxation of the standards enables vehicle manufacturers to meet the targets through conventional internal combustion engine vehicles, relieving them of the pressure to transition towards EVs.

Several vehicle manufacturers in the USA have pulled back investment into electrification, with many realigning their strategy to increase the development and production of vehicles equipped with internal combustion engines. In October 2025, Stellantis announced a US$13bn investment into the USA, with just one EV included in the plans for the investment. In June 2025, GM announced it was investing US$4bn in its manufacturing facilities in the USA, with the investment centred on the production of vehicles with internal combustion engines. The company then wrote down US$6bn in Q4 2025 as part of its realignment away from EVs, including US$4.2bn incurred through cancelling contracts and settling supply deals. This is in addition to the US$1.6bn write down it incurred in Q3 2025 for similar reasons.

Multiple cell production facilities in the USA that were currently manufacturing, or about to start manufacturing, cells for EVs have reactively switched their focus towards the ESS market. While there will be an increase in domestic LFP production in the USA in the coming years, the majority of this cell supply will be destined for the ESS market. For instance, Ford announced in December 2025 that it plans to invest roughly US$2bn into its newly launched ESS business. As part of this, the automotive giant will begin LFP production in the USA with the view of beginning the shipment of ESS systems in 2027 with an annual capacity of 20GWh.

Much like the rest of the EV supply chain, regional differences are stark regarding LFP, with production and deployment heavily divergent by region. A market environment where LFP supply on a mass scale can be decoupled from China is extremely challenging to achieve in the short term, resulting in an LFP landscape where those divergences will grow ever deeper.

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