LFP Battery-Cell Production for Electric CVs Planned in U.S.

September 7, 2023

Ryan Gehm

China remains the clear leader in manufacturing of lithium-ion battery cells for commercial vehicles and passenger cars, but North America will claim some of that share in the coming years as it becomes the fastest-growing regional market for planned cell capacity, according to a recent report from Clean Energy Associates (CEA).

As global lithium-ion battery-cell capacity is set to increase by 186% from 2022 to 2025, North America’s capacity growth is expected to outpace Europe’s, according to CEA, primarily due to incentives in the U.S.’s Inflation Reduction Act (IRA).

A similarly optimistic outlook from the Department of Energy’s (DOE) Vehicle Technologies Office shows that total battery manufacturing capacity in North America is projected to be nearly 20 times greater in 2030 compared to 2021 – about 1,000 gigawatt-hours (GWh) per year vs. 55 GWh/year.

Automakers such as Ford previously announced plans to install lithium iron phosphate (LFP) cell production capacity in North America. Commercial-vehicle manufacturers similarly are driving growth in this area, evidenced by an announcement on Sept. 6 that Accelera by Cummins, Daimler Truck and Paccar are forming a joint venture to manufacture LFP battery cells for battery-electric commercial vehicles and industrial applications.

Total investment is expected to be about $2-3 billion for the 21-GWh, “state-of-the-art” dedicated LFP cell factory. The first battery cells will be produced for vehicles in North America, with production scheduled to start in 2027, a Daimler Truck spokesperson shared with SAE Media. Accelera by Cummins – the company’s zero-emissions business unit – Daimler Truck and Paccar each will own 30% of the joint venture. Chinese cell maker EVE Energy will serve as the technology partner and hold a 10% ownership stake. EVE Energy will contribute its LFP battery-cell design and manufacturing expertise.

“Twenty-one gigawatt-hour is a very big number in the context of trucks and buses,” Jamie Fox, principal analyst at Interact Analysis, commented on the announcement. “A 21-GWh plant, operating at full capacity in 2026, would provide enough batteries for the entire North American market for all battery-electric buses and medium- and heavy-duty trucks combined, assuming about 10% of trucks are electric in that year.”

The partners said that the joint venture initially will focus on LFP battery cells because they offer several advantages compared to other battery chemistries such as NMC (nickel manganese cobalt) lithium-ion technology. The lower cost of LFP – largely because iron is more abundant than nickel and cobalt – is a major factor, as is its longer life and enhanced safety because LFP cells are less prone to combustion and thermal runaway.

“Based on today’s outlook, LFP is an excellent choice for commercial vehicles,” the Daimler Truck spokesperson said. “Various metrics or KPIs are considered in the development and design of the cell chemistry, and LFP has several advantages in terms of lifetime, cost and thermal spread resistance.”

Achieving economies of scale

The partners are collaborating to find the optimal location for the battery-cell production facility. “The team has narrowed down the list of states and locations to a few that meet our requirements, avoiding sensitive geographic locations due to CFIUS [Committee on Foreign Investment in the United States] considerations, and is now working on the final selection,” the spokesperson said. The final location likely will be announced within the next six months.

The strategic JV enables the companies to create the necessary scale to meet the expected growing demand for battery technology throughout this decade, according to Daimler Truck CEO Martin Daum. “For Daimler Truck, partnerships and a strict focus on costs and smart capital allocation are the key levers to succeed on the path towards sustainable transportation,” he said in a statement. “This planned joint venture enables economies of scale beyond Daimler Truck. It is a key puzzle piece of our battery-industrialization strategy, ensuring access to the right battery-cell technology at the right cost.”

The partners stressed their commitment to reducing carbon emissions consistent with the Paris Climate Agreement. “We have the responsibility to decarbonize in a way that is best for all of our stakeholders and the planet. This requires working closely with key partners,” Jennifer Rumsey, Cummins chair and CEO, said in the statement. “Not only are we advancing a key technology solution for our customers, but accelerating the energy transition in the United States.”

“Our vision is the highest quality, locally produced battery technology to enhance the operations of our customers and help them achieve their operational and environmental goals,” added Preston Feight, CEO of Paccar. The transaction is subject to customary closing conditions and receipt of applicable merger control and regulatory approvals.

“Battery packs in trucks and buses can have double the per-kWh price that passenger cars have – this factory may contribute towards developing economies of scale that can reduce this gap,” Interact Analysis’ Fox said. “Some may want to wait and see until the factory has actually been built, but this announcement is big enough to make people who took a bearish stance on electric trucks in North America to reconsider their position.”

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