The United States was once positioned to lead in lithium iron phosphate (LFP) battery technology, but it has since fallen far behind China. The story of LFP batteries is not just about scientific discovery but also about industrial strategy, market readiness, and the long-term commitment to technological dominance.
The Invention of LFP Batteries
Lithium iron phosphate (LFP) batteries were first developed in the mid-1990s by a research team at the University of Texas at Austin, led by John Goodenough, winner of the Nobel Prize in Chemistry in 2019. The technology presented numerous advantages over traditional lithium-ion batteries that used nickel and cobalt. LFP batteries were safer, less prone to overheating, and had a longer lifespan. They also used iron and phosphate, which were more abundant and cost-effective compared to cobalt, a mineral that was both expensive and geopolitically sensitive due to its heavy reliance on Congolese mining operations.
Despite these advantages, LFP batteries faced significant commercialization challenges in the early years. Their energy density was lower compared to nickel-manganese-cobalt (NMC) batteries, and they suffered from low conductivity. Scientists later resolved these issues through carbon coating and doping techniques, which improved performance. However, by the time these improvements were made, the commercial landscape had already shifted, and American companies struggled to build an ecosystem around LFP batteries.
The U.S. Attempt: A123 Systems and Government Support
In 2009, A123 Systems, a Massachusetts-based startup, attempted to commercialize LFP battery technology with significant federal backing. The company received a $249 million grant under the Obama administration, which was keen to jumpstart the U.S. electric vehicle industry. Policymakers hoped that by investing in LFP battery production, the United States could gain a foothold in the emerging electric vehicle sector. However, demand for electric vehicles at the time was weak, as gasoline prices remained low and automakers were slow to embrace electrification. Without a strong market for LFP batteries, A123 struggled financially. In 2012, the company filed for bankruptcy, and its assets were subsequently acquired by Wanxiang Group, a Chinese auto parts conglomerate. This acquisition effectively transferred crucial U.S. battery technology to China, which saw LFP as a strategic priority.
China’s Strategic Investment and Industrial Policy
China, in contrast to the United States, took a long-term approach to battery technology. The Chinese government designated LFP batteries as a critical technology for national energy security and electric vehicle adoption. Through a combination of subsidies, industrial policy, and aggressive investment, China rapidly scaled up LFP battery production. By the mid-2010s, Chinese battery manufacturers, including CATL and BYD, had built significant capacity to produce LFP batteries at scale. Unlike in the U.S., where the market for LFP remained underdeveloped, China ensured that its domestic electric vehicle industry had a ready supply of LFP batteries, which were cheaper and safer than alternative chemistries.
China’s Dominance in LFP Patents
One of the most decisive factors in China’s dominance of the LFP market was its control over intellectual property. Over the past two decades, Chinese companies have aggressively filed patents related to LFP technology. In 2005, China had only a handful of patents related to LFP batteries. By 2010, Chinese firms had filed over 1,000 patents. By 2015, this number had surged to over 5,000, and by 2023, China held an estimated 25,000 patents related to LFP technology. In contrast, the United States had a far smaller number of filings, with only around 1,400 patents related to LFP batteries as of 2023. The European Union trailed even further behind, with around 1,100 patents.
This massive lead in patents gives China a crucial advantage in global battery production. With intellectual property protections in place, Chinese manufacturers control key processes for improving LFP battery performance, manufacturing efficiency, and integration into electric vehicles. Foreign automakers seeking to use LFP batteries must either license the technology from Chinese firms or establish joint ventures with Chinese battery producers. Even Tesla, which initially relied on NMC batteries, shifted to LFP for its Chinese-made Model 3 in 2021, a move that signaled the growing dominance of Chinese battery technology.
Securing the Supply Chain
China’s strategic approach extended beyond patents. The country also secured raw materials for LFP battery production, ensuring a reliable supply of lithium, iron, and phosphate. Unlike the United States, which failed to develop a comprehensive battery supply chain, China methodically built its capacity across the entire battery ecosystem, from mining to manufacturing to recycling.
The Current Landscape and U.S. Efforts to Rebuild
Today, China produces over 70 percent of the world’s LFP batteries, with CATL and BYD leading global production. The United States, despite having invented LFP technology, remains a minor player in the sector. Although the Biden administration’s Inflation Reduction Act includes provisions to expand U.S. battery manufacturing, it will take years to catch up to China’s dominance in LFP technology.
Lessons from the LFP Battery Case Study
The failure of the United States to capitalize on its early lead in LFP batteries is a case study in industrial policy and market timing. While the U.S. focused on short-term market dynamics and failed to support its battery industry through the early adoption phase, China took a long-term approach, treating LFP as a strategic asset. The consequences of this divergence are clear: China now leads the world in battery production, and the United States is playing catch-up in a sector it once pioneered.
Sources
- Bloomberg | “How the U.S. Lost the Battery Race to China“
- MIT Technology Review | “The Rise of LFP Batteries in China“
- The Verge | “Why Tesla is Betting on LFP Batteries”
- Volta Foundation| “2023 Battery Report“
- Friedman, Thomas L. “Our Bar-Napkin Presidency“, New York Times, February 4, 2025.