The Law of Bottlenecks Explains Why Automakers Should Switch Batteries

Welcome back to The Electric! 

One of the main undercurrents in the electric vehicle race is tension over what EV battery is better: those based on nickel or on iron? This week, we dig into the often irrational logic of the battery chemistry debate, and come out on the side of a simple law that clears up much of the confusion. 

On the cusp of the launch of massive numbers of new electric vehicles, two manufacturers have pulled away from the crowd—Tesla and Byd, the Chinese auto and battery maker backed by Warren Buffett. Both are on track to cross the symbolic barrier of selling 1 million EV or plug-in hybrids this year. As it happens, the pair share a notable feature: They both rely massively on an unusual battery—lithium-iron-phosphate, a chemistry widely treated in the West as second-rate but one that’s safer and often cheaper than the favored nickel-led formulations.

In its earnings call last month, Tesla said that almost half the EVs it sold in the first quarter this year used LFP batteries, and CEO Elon Musk has said he eventually intends to use the chemistry in two-thirds of the company’s vehicles. A year ago, Byd said it was abandoning nickel-based chemistries entirely and using only LFP cells in its vehicles.