Battery Metals Demand Faces Slower Path as Hybrid Vehicle Growth Extends

Battery Metals

Battery metals demand could face a slower growth path as carmakers and suppliers expect hybrids and range extenders to remain important for longer than earlier electric-only transition models assumed. Speakers at the FT Future of the Car summit said vehicle decarbonisation should be measured by emissions reduction, not only battery electric vehicle share.

Battery metals demand remains structurally supported by electrification. However, a longer hybrid phase could reduce near-term demand intensity for lithium, nickel, cobalt and manganese because hybrid vehicles use smaller battery packs than full battery electric vehicles.

Battery metals demand assumptions are therefore becoming more complex. Automotive electrification is still progressing, but the industry is moving toward a mixed powertrain future rather than a simple shift from combustion engines to full BEVs.

Horse Powertrain chief executive Matias Giannini said half of passenger vehicles could still be produced with some form of combustion or hybrid powertrain by 2040. That outlook would keep investment flowing into efficient hybrid systems alongside EV platforms.

Hybrid Growth Changes the Battery Raw Materials Curve

Hybrid vehicle growth could temper the pace of battery raw material demand without reversing electrification. Hybrids and range extenders still require electric motors, inverters, wiring and batteries, but their battery packs are much smaller than those used in BEVs.

This matters most for nickel. High-nickel NCM and NCA batteries are closely tied to longer-range BEVs, where larger packs are needed to deliver performance and driving range.

A slower BEV ramp-up could delay some of the nickel sulphate demand growth that has supported investment cases for new battery-grade nickel projects. It could also affect cobalt and manganese demand in cathode chemistries exposed to full EV penetration rates.

Lithium remains supported across almost every electrification pathway. Still, a longer hybrid transition could slow the rate at which large-format BEV batteries absorb lithium units.

The shift does not mean automotive metals demand will weaken across the board. Hybrids use more copper than conventional combustion vehicles because they require electric motors, power electronics and more complex wiring systems.

Continued hybrid and combustion production also supports aluminium castings, stainless steel, exhaust components and engine-related materials. Meanwhile, BEV growth still supports aluminium lightweighting, copper wiring, charging infrastructure and battery materials.

The result is a less linear automotive metals outlook. Battery metals may grow more slowly than aggressive BEV scenarios suggest, while broader automotive metals consumption remains supported by platform complexity and mixed powertrain production.

Policy Flexibility Could Reshape European Metal Demand

European suppliers are pushing for more flexibility in the EU regulatory framework. Current policy remains heavily weighted toward full electrification through tailpipe emissions targets.

The EU targets a 100% reduction in tailpipe emissions from new cars and vans from 2035. That effectively ends new combustion engine sales unless future exemptions are created.

Industry participants increasingly want a more technology-neutral route. They argue that hybrids, range extenders, renewable fuels and lower-carbon manufacturing should contribute to emissions reduction alongside BEVs.

This policy debate matters for metals. Battery material demand depends heavily on BEV penetration, average pack size and chemistry choice.

If Europe allows a longer role for hybrids and range extenders, lithium-ion battery capacity demand per vehicle could grow more slowly. That would affect demand forecasts for lithium, nickel, cobalt and manganese.

Chinese EV and hybrid technology is also improving quickly. This puts pressure on European and US automakers to share development costs across BEV, hybrid and range-extender platforms.

For suppliers, the strategic issue is flexibility. Companies tied only to high-growth BEV battery assumptions may face demand timing risk, while suppliers serving copper, aluminium, stainless steel, electronics and hybrid systems may benefit from a broader platform mix.

The automotive transition is still real, but the material demand path is becoming more diversified. Metals markets must now track powertrain mix, not only EV sales headlines.

The Metalnomist Commentary

Hybrid growth does not weaken the energy transition, but it changes the metals timing. Battery metals demand will still rise, yet copper, aluminium and hybrid-related materials may capture more value if automakers choose a longer mixed-powertrain route.

Mazda Eyes Thailand as Key Hub for Electric SUV Production

Mazda SUV

Japanese automaker Mazda is setting its sights on Thailand to become the main production base for its electric and electrified compact SUVs. This move is part of Mazda’s broader strategy to expand its electric vehicle (EV) footprint and to meet the rising demand for environmentally friendly vehicles across the ASEAN region. The investment aligns with Thailand’s ambitions to be a central player in the electric vehicle manufacturing sector.

Strategic Investment in Thailand’s EV Industry

Mazda announced an additional investment of 5 billion baht ($148 million) in Thailand. According to Thailand’s Board of Investment (BOI), this significant financial commitment will enable Mazda to produce up to 100,000 electrified compact SUVs per year. The investment will not only support domestic demand but also fuel exports to Japan and other ASEAN nations, enhancing Mazda’s regional presence.

The investment will focus on two of Mazda’s key manufacturing facilities in Thailand: the Mazda Powertrain Manufacturing Thailand and the AutoAlliance plant. The latter is a joint venture between Mazda and U.S. automaker Ford. The company plans to enhance its vehicle production lines, including the development of engine and electric vehicle battery production, to support the company’s future electrified product offerings.

Mazda’s Strategic Shift Toward Electrification

This investment marks the beginning of Mazda’s gradual shift towards electric vehicle production. According to Masahiro Moro, Mazda’s President and CEO, this is just the start of their transition to xEV (electric vehicle) production. In 2024, like many of its Japanese counterparts, Mazda faced operational challenges, including the suspension of production due to scandals involving tampered safety test results. Despite this, Mazda is taking proactive steps to strengthen its position in the rapidly growing EV market.

The Thai market itself saw a decline in car production in 2024, with a 20% year-on-year drop, according to the Federation of Thai Industries (FTI). However, the Thai government’s support for the electric vehicle industry, including the extension of the BEV production requirements, is expected to provide a significant boost. As of the end of 2024, Thailand had produced nearly 10,000 battery electric vehicles (BEVs), signaling the country’s readiness to be a significant player in the EV landscape.

Conclusion: A Green Future for Mazda and Thailand’s Automotive Sector

Mazda’s focus on Thailand as an EV production hub reflects both the company’s commitment to sustainability and Thailand’s strategic importance in the global automotive industry. As Mazda advances its electrified product line, it aims to capitalize on Thailand’s growing automotive ecosystem and favorable policies supporting EV production. The company’s long-term goals will likely help strengthen both Thailand’s automotive sector and Mazda’s position in the global EV market.

China and EU Resume Electric Vehicle Talks Amid Growing US Tariff Pressures

US tariff, China

Negotiations on Price Commitments Could Ease Trade Friction in the EV Market

China and the European Union (EU) have decided to resume negotiations regarding a price commitment mechanism for battery electric vehicles (BEVs). This decision follows the EU's implementation of countervailing duties on Chinese BEV imports in 2024. The goal of these talks is to replace the tariffs imposed on Chinese electric vehicles (EVs), addressing ongoing trade tensions between China and the EU.

EU's Countervailing Duties and the Push for a Price Commitment Mechanism

In October 2024, the European Commission finalized its ruling on countervailing duties on BEVs imported from China, which came into effect at the end of October. These duties ranged from 17% to 35.3%, impacting major Chinese automakers like BYD, SAIC, and Geely. The aim was to counter what the EU viewed as unfair pricing practices by Chinese EV manufacturers. However, these tariffs have faced opposition from both China and European companies seeking to expand their market share in the fast-growing electric vehicle sector.

Despite early talks on a price commitment mechanism in November 2024, the discussions stalled without significant progress. However, on April 10, 2025, China’s Ministry of Commerce announced that both sides had agreed to resume negotiations on the price commitments and to discuss broader issues of investment cooperation in the automotive industry.

US Tariffs Intensify the Pressure on China and the EU

The resumption of talks between China and the EU comes amidst escalating trade tensions with the United States. As of April 11, 2025, the US imposed a 145% tariff rate on imports from China, adding additional pressure on Chinese manufacturers, particularly in the electric vehicle and battery sectors. US President Donald Trump's tariffs, which were initially implemented in 2024, compounded by those under the Biden administration, have made it nearly impossible for Chinese EVs and lithium-ion batteries to enter the US market.

In an effort to counterbalance the US's growing tariff measures, China has been seeking closer economic ties with the EU. Chinese Premier Li Qiang held discussions with EU President Ursula von der Leyen on April 8, 2025, addressing the need for structural solutions to re-balance bilateral trade relations. The talks have emphasized the urgency of enhancing market access for European businesses in China and forging a collaborative approach to the challenges posed by US tariffs.

Potential Impact on the Electric Vehicle Market

If China and the EU reach an agreement on the price commitment mechanism, it could significantly alter the landscape for Chinese EVs in Europe. Prior to the implementation of the countervailing duties, the EU accounted for about 28% of China’s new energy vehicle (NEV) exports, which includes both BEVs and hybrid plug-in vehicles. However, the tariffs have drastically reduced Chinese EV exports to Europe.

The continuation of trade protectionist measures from both the US and the EU is putting immense pressure on China’s EV and battery markets, particularly as it struggles to enter key international markets. The future of Chinese electric vehicle exports largely hinges on these negotiations, and any breakthrough could bring Chinese-made EVs back into the competitive EU market.

China's Lithium Tech Export Curbs Threaten EU Battery Industry

China's Lithium Battery

Key Technology Export Controls Put European Battery Industry on Edge

China's proposed restrictions on exporting key lithium processing technologies are sending shockwaves through the European Union's (EU) burgeoning battery industry. The proposed curbs target crucial equipment used in lithium extraction and battery material production, including lithium-iron-phosphate (LFP) battery production equipment, cathode preparation technology, and direct-lithium-extraction (DLE) technology, particularly from spodumene and brines. A consultation period is open until February 1st, after which a final decision will be made.

Europe's Reliance on Chinese Technology Raises Concerns About Supply Chain Security

Industry experts warn the impact could be significant, especially for junior European lithium producers heavily reliant on Chinese technology. Companies like Northvolt, which recently announced job cuts and scaled back ambitions, highlight the vulnerability of the EU's current strategy. The restrictions could hinder the development of a robust, independent European battery supply chain.

Companies with In-House Technology See Opportunity Amidst Crisis

However, some companies are better positioned to weather the storm. Vulcan Energy Resources, an Australian company with operations in Europe, claims to have developed in-house absorption-type DLE technology, securing its supply chain and potentially offering solutions to other European players. Vulcan Energy Resources' executive chair, Francis Wedin, emphasized the strategic advantage of their technology, particularly given Goldman Sachs's preference for brine-based lithium extraction due to lower production costs.

European Lithium Market Faces Uncertainty and Calls for Action

Other voices in the European lithium market paint a more concerning picture. Viridian Lithium's chief commercial officer, Luc Pez, warned of potentially "extremely disruptive" consequences for the nascent ex-China battery supply chain. Pez criticized the lack of preparedness in Europe and the US, urging for accelerated reshoring of the battery supply chain and addressing regulatory inconsistencies within the EU. He highlighted the urgent need for Europe to establish concrete plans and achieve its targets in the face of increasing competition from China in the electric vehicle market.

The Future of European Electric Vehicle Market Hangs in the Balance

China's proposed export restrictions underscore the geopolitical complexities of the lithium market and the challenges facing Europe's ambitions in the electric vehicle sector. The move could significantly impact the development of the European electric vehicle market, as the EU aims to reduce its reliance on China for battery supply.

GM Redwood Battery Storage Project Extends EV Battery Value Chain

BESS

GM Redwood battery storage project will deploy repurposed electric vehicle battery packs at a General Motors plant in Michigan, extending the useful life of batteries before final recycling.

GM Redwood battery storage project will combine 100 reused EV battery packs into a 1.5MW/7.2MWh battery energy storage system. The installation will provide dispatchable power and help reduce electricity costs at the manufacturing site.

GM Redwood battery storage project is significant because it connects battery manufacturing, vehicle use, second-life energy storage and materials recovery within one supply chain. Redwood estimates the system will save more than $3mn in electricity costs over its operating life.

The project also shows how retired EV batteries can remain economically valuable even after they no longer meet automotive performance requirements.

Second-Life Batteries Add Value Before Recycling

EV batteries typically retain significant usable capacity when they are removed from vehicles. That remaining energy storage capability can support stationary applications where weight and space are less restrictive than in automotive use.

Repurposing packs for BESS applications can therefore delay recycling while extracting additional economic value from the battery.

For industrial facilities, storage systems can help manage peak electricity demand, provide backup power and shift energy consumption toward lower-cost periods.

The Michigan installation gives GM a direct opportunity to reduce plant electricity costs using batteries already linked to its own vehicle ecosystem.

This model also reduces the need for newly manufactured cells in some stationary storage applications. That can lower incremental demand for lithium, nickel, cobalt, graphite and other battery materials.

However, second-life systems still require testing, battery management and safety controls because used packs can have different degradation histories and performance characteristics.

Redwood Builds Closed-Loop Battery Supply Chain With GM

Redwood's relationship with GM extends across multiple stages of the battery lifecycle. The recycler handles manufacturing scrap, end-of-life EV packs and now second-life energy storage deployment.

Redwood has already received more than 28,000t of material from GM, with another 10,000 EV battery packs expected to enter the pipeline.

The company also works with Ultium Cells, GM's joint venture with LG Energy Solution, to recycle battery production scrap from facilities in Ohio and Tennessee.

This creates a more integrated materials loop. Manufacturing scrap can return quickly to recycling, while vehicle batteries can first enter stationary storage before eventually being processed for material recovery.

The approach could become increasingly important as EV battery volumes grow. Recycling alone captures raw materials, but second-life deployment can add another revenue stage before final recovery.

For automakers, that can improve battery economics while strengthening access to recycled lithium, nickel, cobalt and copper over the longer term.

The Metalnomist Commentary

GM and Redwood are showing that the battery circular economy does not begin with recycling. Second-life storage can create an additional commercial stage between vehicle use and materials recovery, improving both battery economics and supply-chain efficiency.

China Sinopec CATL Investment Accelerates EV Battery Exchange Network Expansion

Sinopec CATL

China Sinopec CATL investment emerged as the state-controlled oil refiner became the largest cornerstone investor in the battery producer's record-breaking Hong Kong IPO. The strategic China Sinopec CATL investment supports the companies' ambitious plan to build 10,000 electric vehicle battery exchange stations nationwide, marking a significant shift for the traditional energy company toward new energy infrastructure as China's EV market continues rapid expansion.

Record IPO Success Validates Strategic Partnership Value

China Sinopec CATL investment positioned the oil refiner as the largest cornerstone investor in CATL's $4.6 billion Hong Kong IPO that became the world's largest listing in 2025. CATL shares surged over 16% in their Hong Kong trading debut on May 20th, closing at HK$306.2 compared to the IPO price of HK$263 per share. The successful market reception demonstrates strong investor confidence in the partnership strategy and China's EV infrastructure development plans.

Meanwhile, the two companies reached an initial agreement in April to build more than 500 EV battery exchange stations nationwide in 2025, with a long-term target of 10,000 stations. This ambitious infrastructure rollout leverages Sinopec's existing network of 30,000 integrated energy charging stations serving 300 million users, including approximately 10,000 EV charging and battery exchange stations already operational across China.

Strategic Project Targets Heavy Vehicle Transportation

However, Sinopec and CATL finalized a specific agreement on May 21st for the Qiji Exchange Station project focused on heavy trucks in Fujian province. The project will serve critical road freight transportation along the coastal route between the Yangtze River Delta and Pearl River Delta using CATL's latest battery exchange system technology. This heavy vehicle focus addresses a key market segment where battery exchange offers significant advantages over traditional charging methods.

Therefore, the heavy truck application demonstrates practical implementation of battery exchange technology for commercial vehicles requiring rapid turnaround times. The coastal corridor route represents one of China's most important freight transportation arteries, making successful deployment here a potential template for nationwide expansion. The project showcases how traditional energy companies can integrate new energy technologies into existing transportation infrastructure.

Traditional Energy Companies Embrace New Energy Transition

Furthermore, Sinopec's investment reflects broader trends among conventional energy companies accelerating investments in new energy markets. State-run energy firm PetroChina launched a "supercharger station" in Shanghai's Yili road area in March, demonstrating industry-wide recognition of EV infrastructure opportunities. These companies leverage existing real estate assets and customer relationships to enter growing new energy segments.

As a result, joint ventures between traditional energy companies and EV technology providers create synergistic opportunities for rapid infrastructure deployment. PetroChina, SAIC, Sinopec, and CATL established the Shanghai JieNeng Zhidui New Energy Technology joint venture in September 2022 to lease EV battery packs and develop battery exchange technology. CATL's construction of a 40 GWh annual capacity factory in Dongying, China's largest oil refining city, further strengthens these traditional energy sector connections.

The Metalnomist Commentary

Sinopec's cornerstone investment in CATL's record-breaking IPO exemplifies how China's traditional energy giants are strategically positioning themselves within the electric vehicle ecosystem, leveraging their existing infrastructure assets to capture new revenue streams in battery exchange services. The partnership's focus on heavy vehicle applications addresses a critical market need where battery exchange technology offers compelling advantages over conventional charging, potentially accelerating commercial EV adoption across China's logistics sectors.

Thailand Extends Deadline for BEV Production Commitments Amid Auto Industry Challenges

Thailand's Federation of Thai Industries

Extension of Commitment Deadlines

The National Electric Vehicle Policy Board of Thailand has announced an extension for battery electric vehicle (BEV) manufacturers to meet their production commitments originally set for this year. The extension, confirmed by the country's Board of Investment (BOI), comes in light of the challenges faced by the auto industry, including reduced production outputs and the impacts of global economic conditions.

Updated Production and Subsidy Guidelines

Under the first phase of Thailand’s EV promotion, known as EV 3.0 measures, BEV manufacturers who received subsidies were required to produce one BEV in 2023 for every vehicle they imported during 2022-2023. This obligation will now increase to producing 1½ BEVs by 2025 for every imported vehicle as part of the updated EV 3.5 measures. However, any unfulfilled commitments from the current year will not qualify for retroactive subsidies but must be met under the new EV 3.5 guidelines before any future subsidies can be applied.

Manufacturers who fail to meet their production quotas under the EV 3.0 scheme will see their unfulfilled obligations roll over into the next phase without the benefit of initial subsidies, as outlined by the BOI on December 4. This strategic adjustment aims to maintain investment momentum in Thailand’s burgeoning electric vehicle market.

Broader Industry Impact

The extension reflects broader challenges within Thailand’s automotive sector, as highlighted by the Federation of Thai Industries (FTI). The FTI has revised down the country's auto production forecast for 2024 twice this year, with the latest figures suggesting a drop from an initial 1.9 million units to 1.5 million units. This downturn is mirrored in the production statistics from January to October, showing a 19% decrease year-over-year, with significant reductions in domestic sales and exports as well.

Despite these setbacks, the production of electric vehicles shows a promising trend, with the production of battery passenger cars, hybrid passenger cars, and plug-in hybrid passenger cars reaching significant numbers. Furthermore, the National Electric Vehicle Policy Board’s recent decision to temporarily reduce the excise tax rate for hybrid EVs from 2028 to 2032 is expected to stimulate approximately 50 billion baht ($1.4 billion) in new investments, provided manufacturers comply with strict CO2 emissions standards and continue to invest in local production capabilities.

Europe EV Growth Rises as Incentives Mask Fragile Demand Signals

Europe EV

Europe EV growth accelerated last month as battery electric vehicle sales rose by 41%, supported by tax incentives, fleet buying and carmakers’ efforts to meet emissions targets. The increase looks strong on paper, but the drivers of demand remain uneven across markets.

Battery electric vehicle sales outpaced plug-in hybrid sales, which rose by 32% across the EU, EFTA and UK. Regular hybrid vehicle sales increased by 15%, while petrol and diesel sales continued to decline across major European markets.

Europe EV growth was strongest in large markets such as France, Germany and Italy. Spain again stood out for plug-in hybrid growth, showing that national policy, consumer economics and model availability continue to shape adoption differently.

The headline growth is important for battery metals and automotive supply chains. Higher BEV sales support long-term demand for lithium, nickel, manganese, graphite, copper, aluminium and rare earth magnets.

Incentives and Fleet Orders Drive the Near-Term Recovery

Tax policy remains one of the main engines behind Europe EV growth. Several member states entered the year with revised company car rules, income-linked subsidies or accelerated depreciation schemes for electric vehicles.

These measures have favoured fleet buyers more than private consumers. Corporate fleets can respond faster to tax incentives, depreciation benefits and emissions rules because they buy vehicles in larger volumes and plan replacements more systematically.

France has tightened the link between EV support and income. Germany’s recovery has been supported by targeted incentives reintroduced in January after earlier policy volatility disrupted demand.

This matters because fleet-led growth can be less stable than broad consumer adoption. Fleet orders can lift sales quickly, but private demand is still sensitive to price, charging access, financing costs and residual value concerns.

Carmakers are also working to meet CO₂ limits. This creates another demand driver that is not purely consumer-led. Automakers may use pricing, leasing and fleet channels to push EV registrations when regulatory targets tighten.

For metals markets, the distinction matters. Stable private adoption creates more predictable battery material demand. Incentive-driven fleet demand can be more volatile if policy changes or budget support weakens.

Oil Shock Adds Uncertainty to EV Demand Outlook

Higher oil prices after the US-Iran war have revived the question of whether fuel costs are pushing consumers toward electric vehicles. However, the evidence is not yet clear.

EV demand was already rising in key markets before the oil shock. Early-year growth appears to reflect incentives, fleet orders and emissions compliance more than a direct consumer shift caused by higher fuel costs.

There is also a timing lag. Vehicle orders usually appear in sales data several weeks later, and delivery times vary by model and country. Any clear oil-price effect may not appear until June or July.

This caution is important because monthly EV data can be distorted by local registration patterns. The UK, for example, often sees a March registration spike because of its plate change system.

The broader strategic message remains clear. If Europe wants to reduce exposure to oil shocks, it needs consistent carbon rules, pollution-based taxation, charging infrastructure and long-term industrial policy.

Stop-start subsidies can create temporary sales jumps, but they can also damage market confidence. Stable rules are more useful for automakers, battery producers, charging companies and metals suppliers.

Europe EV growth therefore remains real but fragile. The region is moving away from petrol and diesel, yet the pace still depends heavily on policy design and fleet purchasing behaviour.

The Metalnomist Commentary

Europe EV growth is not yet a clean demand signal for battery metals because incentives and fleet buying are doing much of the work. The stronger long-term signal will come when private buyers adopt EVs without policy volatility or fuel-price panic.

BYD EV Sales Recover in May as Export Demand Offsets China Weakness

BYD

BYD EV sales returned to year-on-year growth in May as surging overseas demand offset continued weakness in China. The company sold 383,453 new energy vehicles during the month, up 0.3% from a year earlier.

BYD EV sales had declined for consecutive months since October 2025 as domestic policy changes, weaker incentives and government pressure against aggressive price competition weighed on China’s automotive market.

BYD EV sales are now increasingly dependent on international markets. Exports jumped to 160,644 units in May from 89,047 a year earlier, showing how rapidly the company is building a global sales base.

The recovery also highlights a broader shift in China’s EV industry. Domestic competition remains intense, while manufacturers are increasingly using overseas markets to absorb expanding production capacity.

Exports Become BYD’s Main Growth Engine

BYD sold 376,990 passenger NEVs in May and another 6,463 commercial vehicles. Battery electric vehicle sales fell by 2.8% year on year to 198,674 units, while plug-in hybrid sales rose by 3.3% to 178,316 units.

The split shows that plug-in hybrids continue to play an important role in BYD’s product mix. PHEVs can appeal to buyers that want electrification without relying entirely on charging infrastructure.

China classifies battery electric vehicles, plug-in hybrids and fuel-cell vehicles as new energy vehicles. For battery material demand, however, the distinction matters because BEVs generally require larger battery packs than PHEVs.

BYD’s January-May NEV sales fell by 20% year on year to 1.4mn units. The decline followed government and industry efforts to reduce destructive price competition in China’s vehicle market.

The rollback of vehicle purchase tax incentives from 1 January also weakened domestic demand. At the same time, major automakers have committed to paying suppliers within 60 days to improve financial stability across the supply chain.

Exports are increasingly compensating for that pressure. Brazil has become one of BYD’s most important international markets and is now the largest destination for Chinese NEV exports.

Easing import restrictions in markets including Canada could provide additional export opportunities. This strengthens the case for Chinese automakers to continue expanding assembly, logistics and distribution networks overseas.

EV Export Growth Supports Battery Materials Demand

Higher oil prices have also improved the relative economics of electric vehicles. Rising crude prices since the escalation of Middle East tensions have increased operating costs for combustion-engine vehicles and strengthened EV competitiveness.

This can support demand for lithium, graphite, copper and other battery materials if EV exports continue to rise. However, the material impact will depend on the mix between BEVs and smaller-battery plug-in hybrids.

BYD’s shift also matters for the wider automotive metals market. Growing EV output supports copper demand through motors, wiring and power electronics, while alu

minium remains important for lightweight structures and battery enclosures.

The company has been fully committed to electrified vehicles since ending production of gasoline-only cars in March 2022. BYD sold 4.626mn NEVs in 2025, up 8.3% from the previous year.

The challenge now is geographic balance. Domestic growth is slowing, while overseas markets are becoming more important to utilisation rates and future production growth.

That shift could accelerate localisation outside China. As export volumes rise, BYD and other Chinese automakers may increasingly invest in overseas assembly and regional supply chains to manage tariffs, logistics and local-content rules.

The Metalnomist Commentary

BYD’s May recovery shows that China’s EV growth story is becoming increasingly export-driven. For battery metals, the key variable is no longer only Chinese vehicle sales, but how quickly Chinese manufacturers can convert overseas demand into sustained BEV and PHEV production growth.

Honda Ontario EV Plan Suspended Amid Slower Market Growth Projections

Honda EV

Honda suspended its ambitious C$15 billion ($10.7 billion) Honda Ontario EV plan to build a comprehensive electric vehicle value chain in Canada. Chief Executive Toshihiro Mibe announced the two-year delay during the company's first-quarter earnings presentation, citing slower-than-expected EV market growth. The Honda Ontario EV plan postponement represents a significant setback for Canada's battery materials supply chain development and critical mineral processing ambitions.

Comprehensive Battery Supply Chain Project Faces Market Reality

The Honda Ontario EV plan encompassed a complete electric vehicle manufacturing ecosystem in Alliston, Ontario, including an EV assembly plant and standalone battery manufacturing facility. Honda partnered with Posco Future M to develop cathode and precursor materials facilities while collaborating with Asahi Kasei on separator plant construction. Meanwhile, this integrated approach aimed to reduce supply chain dependencies while supporting Honda's goal of 100% battery and fuel cell EV sales by 2040.

The comprehensive nature of the Honda Ontario EV plan positioned Canada as a strategic hub for North American electric vehicle production. Honda's investment would have created substantial demand for Canadian critical minerals, particularly lithium, nickel, and cobalt for battery cathode materials. However, slower market adoption rates have forced automakers to reassess their aggressive electrification timelines and associated capital investments.

Critical Mineral Processing Ambitions Face Automotive Headwinds

Canada's strategy to capture value from its abundant critical mineral resources through downstream processing suffers a major blow from the Honda Ontario EV plan suspension. The project represented a key opportunity to establish domestic battery materials manufacturing capabilities using Canadian lithium, nickel, and graphite resources. As a result, the delay undermines government efforts to build integrated critical mineral supply chains within North America.

Posco Future M's planned cathode and precursor facilities would have processed Canadian-sourced critical minerals into high-value battery materials for Honda's EV production. The partnership promised technology transfer and manufacturing expertise to establish Canada's position in global battery supply chains. Therefore, the Honda Ontario EV plan postponement reduces near-term demand prospects for Canadian critical mineral producers seeking domestic processing partnerships.

The two-year delay reflects broader challenges facing automaker electrification strategies as consumer adoption lags initial projections. Honda joins other manufacturers reassessing EV investment timelines amid market uncertainty and profitability concerns. Consequently, critical mineral demand growth may moderate as automakers adjust production capacity plans to match actual market conditions.

The Metalnomist Commentary

Honda's decision to pause its massive Ontario investment reflects the gap between aggressive EV transition rhetoric and market reality, highlighting risks for critical mineral producers banking on rapid battery demand growth. This setback underscores the importance of diversified demand strategies for Canadian critical mineral projects, as automotive electrification timelines prove more volatile than anticipated across the industry.

Suzuki e-Vitara Electric SUV Launch Signals a Bigger EV Push in India

Suzuki eVX

Suzuki e-Vitara electric SUV marks the company’s formal shift into full battery electric vehicles. Suzuki began sales of the e-Vitara in India, making it the firm’s first BEV model. This launch matters because Suzuki has long relied more heavily on hybrids. As a result, Suzuki e-Vitara electric SUV becomes a strategic test of how seriously the company will pursue the EV market.

The launch also puts India at the center of Suzuki’s electric transition. The model is built at Maruti Suzuki’s Hansalpur plant in Gujarat. That site already sits inside a broader expansion plan targeting 1mn EVs per year. Therefore, Suzuki e-Vitara electric SUV is not just a product launch. It is part of a much larger manufacturing ambition.

India EV Supply Chain Still Looks Tight

India EV supply chain remains the biggest constraint behind Suzuki’s electric growth path. The company did not disclose battery chemistry or sourcing details for the e-Vitara. That leaves open a critical question about how Suzuki will secure enough cells as production rises. Consequently, the commercial success of the Suzuki e-Vitara electric SUV will depend on more than vehicle demand alone.

The wider Indian market is still dealing with upstream bottlenecks. Carmakers warned last year that China’s rare earth export controls could slow motor production because of magnet shortages. Domestic projects in lithium, nickel, cobalt, and rare earths have also moved slowly. Therefore, India EV supply chain development still lags the scale of EV ambition.

Maruti Suzuki EV Strategy Extends Beyond the Vehicle Itself

Maruti Suzuki EV strategy is not limited to selling one electric SUV. The company also announced a goal of 100,000 branded charging points by 2030. It has already installed 2,000 of them. That means Suzuki is trying to shape the charging ecosystem alongside vehicle rollout. As a result, the Suzuki e-Vitara electric SUV launch is tied to infrastructure as well as manufacturing.

This wider strategy makes sense in a market where ecosystem gaps still matter. Other Indian EV and battery plans have already been scaled back or delayed. That creates space for more disciplined players to build practical scale over time. Meanwhile, Maruti Suzuki EV strategy may benefit from moving more steadily than some earlier industry promises.

The Metalnomist Commentary

Suzuki’s first electric SUV matters because it shows India’s EV shift is moving from announcements to actual product launches. The bigger challenge now is not whether Suzuki can build an electric model. It is whether India can build the battery materials, cells, magnets, and charging network needed to support that growth at scale.

Nickel Deficit Forecast Emerges as Indonesia Tightens Ore Supply

Nickel manufacturing

Nickel deficit conditions are expected to return in 2026 as Indonesia tightens ore supply controls and stainless steel demand continues to grow. The International Nickel Study Group forecasts global primary nickel production of 3.715mn t against usage of 3.747mn t, implying a deficit of 32,000t.

The nickel deficit would mark a sharp change after three consecutive years of surplus. The market recorded surpluses of 175,000t in 2023, 116,000t in 2024 and 283,000t in 2025.

The nickel deficit forecast remains modest, but it carries strategic significance because it depends heavily on Indonesian policy. Indonesia has been the main driver of global nickel supply growth, and tighter controls on ore mining could slow the expansion that previously pushed the market into surplus.

The Middle East conflict is adding another layer of uncertainty. Higher energy prices, inflation pressure and disrupted sulphur flows could affect nickel production costs, especially for high-pressure acid leach operations in Indonesia.

Indonesia Ore Controls Reshape Nickel Supply Growth

Indonesia’s approved nickel ore mining quota for 2026 has been set significantly lower than in 2025. The quota can still be revised, but the initial reduction has already changed market expectations.

The country’s revised mineral benchmark pricing mechanism also took effect on 15 April. The new HPM formula raises base prices for all nickel ore grades and includes cobalt, iron and chromium in the valuation for the first time.

This matters because Indonesian nickel supply is no longer expanding under the same low-cost conditions that drove rapid output growth. Ore access, ore pricing, royalties and contained metal values are all becoming more tightly managed.

The policy impact is not evenly distributed. Eramet’s PT Weda Bay Nickel mine is preparing to enter care and maintenance in May after receiving an initial ore quota of just 12mn wet metric tonnes. This is far below last year’s final permit of up to 42mn wmt.

In contrast, Nickel Industries received quota approvals of 14.3mn wmt, up from 10.5mn wmt in 2025. This shows that Indonesia’s controls are not simply cutting all supply. They are also reshaping which operators receive ore access.

The quota system could therefore become a major competitive factor. Producers with larger approved volumes may gain stronger operating flexibility, while others face lower utilisation, higher costs or temporary shutdowns.

HPAL producers are especially exposed. These plants require steady limonite ore supply and large volumes of sulphuric acid or sulphur-linked feedstock. Tighter ore availability and higher reagent costs can quickly pressure margins.

Disrupted sulphur flows from the Middle East conflict have raised concern over HPAL feedstock availability. This is important because Indonesian HPAL projects have become key suppliers of mixed hydroxide precipitate for battery material production.

If sulphur costs remain elevated and ore prices rise under the new HPM formula, HPAL production costs could increase materially. That would weaken the low-cost supply advantage that helped Indonesia dominate battery-linked nickel intermediates.

Stainless Steel Supports Demand as Batteries Disappoint

Stainless steel remains the main support for nickel demand. INSG said the stainless steel sector grew in 2025 and is expected to expand further in 2026.

This is important because stainless steel still consumes far more nickel than the battery sector. Demand from stainless steel, alloys and industrial uses continues to anchor the primary nickel market.

Battery demand has grown more slowly than earlier expectations. Lithium iron phosphate chemistries have gained market share, reducing nickel intensity in parts of the electric vehicle market.

Plug-in hybrid electric vehicle demand has also outpaced fully battery-electric vehicle demand in some markets. This has limited the speed at which nickel-rich battery chemistries absorb new supply.

The result is a market caught between two forces. Supply growth is slowing because of Indonesian ore controls and higher input costs. However, battery demand is not rising fast enough to create a large structural shortage.

This makes the 2026 nickel deficit highly sensitive to policy and disruption. If Indonesia raises quotas, supply could recover. If sulphur, energy or ore costs worsen, the deficit could deepen.

The forecast also changes the market narrative. Nickel has spent recent years under pressure from surplus supply and rising inventories. A move into deficit, even a small one, could stabilise sentiment and support prices.

Still, the deficit is not yet a sign of broad scarcity. It is a warning that Indonesia’s supply discipline, not battery demand alone, is now determining the market balance.

For producers, cost control and ore access will become more important. For buyers, the focus will shift toward supplier reliability, feedstock route and exposure to Indonesian policy.

The Metalnomist Commentary

The nickel market is not tightening because batteries suddenly absorbed the surplus. It is tightening because Indonesia is putting discipline into ore supply while HPAL costs rise. That makes the nickel deficit more policy-driven than demand-driven.

Stellantis NextStar Battery JV Exit Signals a New Shift in North American Battery Strategy

NextStar Battery

Stellantis NextStar battery JV exit marks another important shift in North American battery strategy. Stellantis will sell its 49pc stake in NextStar Energy to LG Energy Solution. The joint venture built Canada’s first large-scale lithium-ion battery plant in Windsor, Ontario. As a result, Stellantis NextStar battery JV exit shows that automakers are rethinking how they participate in battery manufacturing.

This move matters because NextStar was a major industrial project. Stellantis and LG Energy Solution invested more than C$5bn in the venture. Yet the ownership structure is now changing even as the plant remains strategically important. Therefore, Stellantis NextStar battery JV exit is not a retreat from batteries. It is a shift in how the company wants to access them.

Stellantis will remain a customer of the facility after the transaction. That means the company still wants battery supply, but no longer wants to own nearly half of the manufacturing platform. Consequently, Stellantis NextStar battery JV exit reflects a broader trend toward supply access without full operating exposure.

EV Battery Joint Ventures Are Moving Into a New Phase

EV battery joint ventures are no longer being treated as fixed long-term ownership models. Automakers are increasingly separating battery access from battery plant ownership. That change is becoming visible across North America. As a result, EV battery joint ventures are entering a more flexible and less traditional phase.

The Stellantis decision fits a wider pattern. Other major automakers have also restructured or exited battery partnerships. General Motors sold its Michigan battery JV stake to LG Energy Solution in 2025. Ford also changed the structure of its BlueOval SK partnership later that year. Therefore, Stellantis NextStar battery JV exit looks less like an isolated deal and more like an industry reset.

This shift likely reflects changing economics and strategy. Battery manufacturing is capital-intensive, operationally complex, and increasingly competitive. Automakers may now prefer to secure output through commercial agreements while leaving plant ownership and operation to battery specialists. Meanwhile, battery makers can broaden their customer base more easily under that structure.

North American Battery Strategy Is Becoming More Specialized

North American battery strategy is now moving toward clearer specialization between automakers and cell producers. After the ownership change, NextStar will serve a broader customer base, including the energy storage system sector. That gives the plant more flexibility than a single-customer automotive model. As a result, the facility may become commercially stronger even as Stellantis reduces direct ownership.

This matters because battery plants are no longer only tied to electric vehicle demand. Energy storage systems are becoming a second major growth market. A battery facility that can sell into both EVs and stationary storage may have better long-term utilization and lower concentration risk. Therefore, North American battery strategy is becoming more diversified at the customer level.

The broader lesson is clear. Automakers still need batteries, but they may not want to carry the same level of manufacturing ownership risk as before. Battery producers, meanwhile, can gain more control and expand into wider end markets. Consequently, Stellantis NextStar battery JV exit may signal a more mature phase in the North American battery buildout.

The Metalnomist Commentary

This deal matters because it shows the battery race is no longer only about building plants. It is now about deciding who should own them, run them, and absorb the risk. Stellantis still wants battery supply, but LGES now looks better positioned to turn NextStar into a broader industrial platform.

UK BEV Sales Increase 41% in January, Still Fall Short of Government Mandate

UK BEV

EV Market Struggles to Meet Zero-Emissions Vehicle Mandate as New Tax Threatens Growth

Battery Electric Vehicle (BEV) sales in the UK saw a significant increase of 41% in January 2025, reaching 29,634 units. Despite this growth, the sales still failed to meet the government's mandated market share of 28%, according to data from the Society of Motor Manufacturers and Traders (SMMT).

In terms of market share, BEVs accounted for 21.3% of UK vehicle sales in January 2025, up from 14.7% in January 2024, based on figures from clean energy group New Automotive. While this shows a positive trend, the 21.3% market share is still below last year’s target of 22% and this year's ambitious 28% goal set by the UK government as part of the zero-emissions vehicles mandate, effective since 2024. This mandate is part of the UK’s broader efforts to reduce vehicle emissions and combat climate change.

Government Incentives Fall Short Amid New Tax Challenges

Despite a £4.5bn ($5.6bn) investment by UK automakers in new electric vehicle models and consumer discounts in 2024, demand for BEVs is still tepid. Consumers continue to seek more government incentives to switch to electric vehicles, the SMMT reports.

The situation has become more challenging with the introduction of the UK vehicle excise duty (VED) for BEVs from 1 April 2025. EVs priced above £40,000 will now incur a £3,100 tax over the first six years of ownership, a sharp contrast to the previous zero-tax policy. Despite a reduction in EV prices since the £40,000 threshold was set eight years ago, many electric vehicles still fall into the luxury category and remain priced above this limit.

The SMMT has voiced concerns that this new tax will dissuade potential EV buyers, calling for a revision or cancellation of the duty. “Rather than penalizing EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet government, industry, and societal climate change goals,” said a spokesperson from SMMT.

The EV Premium Continues to Shrink

One encouraging sign for the industry is that the price premium of electric vehicles over traditional internal combustion engine models has decreased significantly. As of December 2024, the EV premium dropped to 25%, compared to 73% in January 2020, according to Auto Trader, an online car dealership.

The UK’s EV market remains heavily dependent on fleet sales, which made up 62.4% of total vehicle sales in January 2025, a 3.7% decrease from the previous year. Fleet sales include corporate and salary sacrifice scheme vehicles, which are significant drivers of BEV demand in the UK. In contrast, private car sales saw a minor decline of 0.5%, with BEVs representing about 22% of corporate vehicle sales in 2023, compared to just 9% of private sales.

Li-Cycle Signs Exclusive Recycling Agreement with EU EV Manufacturer

Li-Cycle

Li-Cycle Partners with European Luxury EV Maker for Battery Recycling

Canadian lithium-ion battery recycler Li-Cycle has entered into an exclusive recycling agreement with a high-performance luxury electric vehicle (EV) manufacturer in the European Union. While the name of the manufacturer and specific details regarding the agreement remain undisclosed, this collaboration is set to play a crucial role in the circular economy of the electric vehicle industry.

Enhancing Battery Recycling Operations in Germany

The agreement ensures a steady supply of feedstock from the EV production facility located in the European Union to Li-Cycle’s spoke facility in Magdeburg, Germany. Li-Cycle operates a spoke-and-hub network, where used batteries are first shredded into black mass at the spokes. This black mass is then processed at the hubs to extract valuable materials such as lithium, cobalt, and nickel, which are essential for the production of new batteries.

Li-Cycle's expansion into Germany is a significant step in its mission to build a sustainable solution for lithium-ion battery recycling. The company’s innovative process helps recover critical raw materials, ensuring the responsible disposal and reuse of EV batteries in Europe.

A Strong Financial Backing for Growth

In November 2022, Li-Cycle secured a loan of up to $475 million from the US Department of Energy, which was later upsized by $100 million. This funding boosts the company’s ability to expand its operations and facilities globally, including its new venture in Germany. With the growing demand for EVs and the rise in battery recycling needs, Li-Cycle is well-positioned to serve as a key player in the transition to a greener future.

Conclusion: A Key Step in EV Battery Sustainability

Li-Cycle’s exclusive agreement with an EU-based luxury EV manufacturer signals a promising future for battery recycling. The partnership not only contributes to the global push for sustainability but also strengthens Li-Cycle's role in the critical metals supply chain. As the electric vehicle industry continues to grow, so does the demand for sustainable solutions to manage battery waste and recover valuable materials.

Factorial Solid-State Battery Cells Enable Extended Drone Range for Avidrone

Factorial Energy

Factorial solid-state battery cells achieved a milestone deployment as the US battery technology startup shipped its first FEST® (Factorial Electrolyte System Technology) lithium-metal battery cells to Canada's Avidrone Aerospace. The Factorial solid-state battery cells deliver up to 50% higher energy density compared to conventional lithium-ion batteries, enabling extended range capabilities for cargo drones in defense, commercial, and emergency response applications.

Revolutionary Energy Density Transforms Drone Performance

Factorial solid-state battery cells provide up to 50% greater energy density than conventional lithium-ion batteries, unlocking longer flight times, greater payload capacity, and expanded mission range. Initial modeling by Avidrone suggests that FEST® technology could double the range of its aircraft for a given payload, a transformational upgrade for drone-based delivery, surveillance, and emergency response. The proprietary FEST technology utilizes solid-state lithium-metal chemistry optimized for high-power, lightweight applications essential for next-generation unmanned aerial vehicles.

Meanwhile, Avidrone will integrate Factorial's solid-state cells into its high-endurance cargo drone platform for demonstration flights focused on evaluating energy efficiency, power discharge, payload capacity, and range under real-world operating conditions, including high altitudes, variable temperatures, and sustained vibrations. The testing program validates performance under operational stresses typical in tactical and industrial drone missions, providing critical data for commercial deployment.

Strategic Market Entry Addresses Defense Supply Chain Security

However, the partnership represents more than technological advancement, addressing growing demand for domestically sourced battery solutions in defense and aerospace sectors. "This delivery is a major step forward in bringing our battery platform to the skies," said Siyu Huang, CEO of Factorial. "Drones are not just an emerging market – they're a strategic priority for national defense, critical logistics, and infrastructure resilience". The US-based manufacturing platform supports defense requirements for secure, American-made energy storage solutions.

Therefore, Avidrone develops and manufactures unmanned rotorcraft which can lift payloads in excess of 50lbs over ranges of 50 miles and autopilot control systems for government, defense, and commercial applications. "In unmanned systems, weight equals range – and range defines the mission," said Scott Gray, Founder and CEO of Avidrone Aerospace. "Factorial's solid-state cells give us a critical edge in endurance and payload, unlocking new capabilities for defense, logistics, and beyond".

Expanding Market Opportunities Beyond Electric Vehicles

Furthermore, while Factorial maintains its commitment to electric vehicle markets through partnerships with Stellantis, Mercedes-Benz, and other automotive manufacturers, the drone sector represents a strategically aligned growth market.

Demand for high-performance, domestically developed batteries in drones presents an opportunity to engage early customers, accelerate manufacturing maturity, and apply critical performance feedback. These capabilities transfer directly to Factorial's EV roadmap while supporting defense sector requirements.

As a result, the global unmanned aerial systems market expansion provides substantial opportunities for advanced battery technologies. Market forecasts indicate drone sector growth of $36.1 billion between 2024 and 2028, with military applications alone projected to reach $65 billion by 2032. Factorial's entry positions the company advantageously within this rapidly expanding market while demonstrating practical applications for solid-state battery technology beyond traditional automotive applications.

The Metalnomist Commentary

Factorial's entry into drone applications demonstrates how solid-state battery technology can unlock transformational performance improvements in weight-critical applications, with the potential to double aircraft range representing a quantum leap in unmanned systems capabilities. The strategic timing aligns with growing demand for domestically sourced defense technologies, positioning Factorial to capture dual-use market opportunities while advancing its core electric vehicle technology through real-world aerospace validation.

Rivian Second-Life Battery Storage Project Links EV Packs to Grid Reliability

Rivian, Redwood

Rivian second-life battery storage is moving into commercial use after the US electric-vehicle maker agreed to deploy repurposed battery packs through Redwood Materials at its Normal manufacturing plant in Illinois. The project will use more than 100 used Rivian battery packs to provide 10 MWh of dispatchable battery energy storage.

The Rivian second-life battery storage project gives retired EV packs a second use before recycling. Redwood Materials will integrate the packs into a Redwood Energy system for on-site use at Rivian’s manufacturing facility.

Rivian second-life battery storage also reflects a wider shift in the battery value chain. Automakers and recyclers are looking for ways to extract more value from battery packs before recovering lithium, nickel, cobalt, copper, aluminium and other materials.

Redwood Turns Used EV Packs Into Stationary Storage

Redwood will receive EV battery packs from Rivian and convert them into a battery energy storage system for the Normal plant. The system will help reduce energy costs and support local grid reliability.

Second-life batteries are useful because EV packs can still retain meaningful capacity after vehicle use. They may no longer meet automotive performance requirements, but they can still serve stationary storage applications.

This creates a bridge between mobility and grid infrastructure. A battery pack can first support vehicle electrification, then provide stationary power, and later enter recycling for critical material recovery.

Redwood receives more than 20 GWh/yr of batteries, giving it a large feedstock base for both reuse and recycling. The company said it can deploy BESS projects in as little as six months, which matters as power demand rises quickly.

Data Center Power Demand Raises Storage Value

Rivian has attracted investors such as Google, which are seeking faster access to power solutions for artificial intelligence data center growth. This connection shows why second-life batteries are becoming more strategically relevant.

AI data centers need reliable, flexible and rapidly deployable power. Battery energy storage systems can help manage peak demand, improve resilience and reduce pressure on grids facing new large-load connections.

Repurposed EV batteries could become a lower-cost option where speed matters more than maximum energy density. They may also reduce waste and delay the need for immediate material recycling.

For the metals supply chain, this creates a more circular model. Battery materials stay in productive use longer, while recyclers build stronger long-term access to end-of-life packs and future recovered metals.

The Metalnomist Commentary

Rivian and Redwood are showing how EV batteries can become grid assets before they become recycling feedstock. The strategic value lies in extending battery life, lowering storage costs and securing future material recovery in one integrated loop.

Global Battery Demand Nears 1TWh in 2024 as LFP Market Share Surges

Battery

EV Growth and China Lead Surge in Battery Demand

Global battery demand reached nearly 1TWh in 2024, largely driven by rising electric vehicle (EV) adoption, according to the IEA's latest EV Outlook 2025. The Focus Keyphrase "global battery demand" continues to dominate energy transition narratives as EV sales accelerate across major economies.

EV battery demand alone exceeded 950GWh, accounting for more than 85% of total battery consumption. China led with 59% of EV battery demand, followed by the U.S. and EU, each holding a 13% share. The IEA projects battery demand will more than triple to over 3TWh by 2030 under current national policies. While supply of critical minerals is currently in surplus, the IEA warns that depressed prices could deter future investment, risking lithium and nickel shortages by decade’s end.

Battery Manufacturing Grows Faster Than Demand

Global battery manufacturing capacity grew by nearly 30% to 3.3TWh in 2024, tripling actual demand. If all announced projects proceed, capacity could reach 6.5TWh by 2030, outpacing the IEA’s projected demand.

South Korea led overseas battery capacity expansion with over 400GWh deployed in 2024, far ahead of Japan (60GWh) and China (30GWh). If planned projects materialize, South Korea could produce over 1TWh annually by 2030, almost double China’s expected output. As a result, China’s global manufacturing share is projected to fall from 85% in 2024 to two-thirds by 2030, diversifying global supply chains.

LFP Dominates Market as Regional Dynamics Shift

Lithium iron phosphate (LFP) batteries now make up nearly half of the global EV battery market, with Chinese producers holding a de facto monopoly, especially in Europe and the U.S. European OEMs are increasingly opting for LFP chemistries to cut costs, displacing South Korean suppliers.

South Korean battery makers’ EU market share fell to 60% in 2024, down from 80% in 2022, while their U.S. market share rose to 35%, closing in on Japan’s 48%. Major Korean firms — LG Energy Solution, SK On, Samsung SDI — are all preparing for mass LFP production to compete in this fast-growing segment.

Meanwhile, LFP adoption in Southeast Asia, Brazil, and India has surpassed 50% of battery electric car sales, signaling rapid global penetration. However, Japanese battery makers face domestic setbacks, highlighted by Nissan’s cancellation of its Kyushu LFP plant amid restructuring.

The Metalnomist Commentary

The rise in global battery demand underscores a structural transformation in energy, mobility, and manufacturing. While demand growth is robust, the oversupply of battery capacity and volatility in mineral prices highlight the sector’s growing pains. As LFP continues its global ascent, regional competition and vertical integration will shape the future of the battery ecosystem.

China LFP Supply Deal Between Wanrun and CATL Secures 1.32 Million Tonnes

Wanrun

China LFP supply deal reached historic proportions as Hubei Wanrun New Energy Technology signed a five-year agreement to deliver 1.32 million tonnes of lithium-iron-phosphate cathode materials to CATL. The massive China LFP supply contract from May 2025 through May 2030 represents one of the largest battery materials procurement agreements in the industry, highlighting CATL's aggressive expansion strategy and LFP technology's growing market dominance.

Strategic Partnership Drives Battery Technology Innovation

China LFP supply partnership extends beyond simple procurement to encompass joint research and development initiatives. Wanrun and CATL agreed to collaborate on high-density LFP product iteration and mass production capabilities while jointly exploring new energy market opportunities. CATL committed to purchasing at least 80% of promised monthly quantities, providing Wanrun with guaranteed revenue streams and production planning certainty.

Meanwhile, Wanrun demonstrated strong operational performance with 2024 LFP production reaching 233,108 tonnes, representing 51% growth from 2023. Sales volumes increased 39% to 228,240 tonnes during the same period, reflecting robust market demand and the company's expanding manufacturing capabilities. This performance trajectory supports the substantial supply commitments made to CATL.

CATL's Market Leadership Drives Demand Growth

However, CATL's explosive growth trajectory necessitates secured raw material supplies for sustained market expansion. The battery giant sold 120 GWh of batteries in Q1 2025, marking 30% year-over-year growth and reinforcing its position as China's largest battery producer. CATL raised $4.6 billion through Hong Kong Stock Exchange share sales on May 20th, specifically targeting global battery market expansion financing.

Therefore, the Wanrun supply agreement aligns perfectly with CATL's international growth strategy and capital deployment plans. The five-year commitment provides production stability while supporting CATL's aggressive capacity expansion across multiple global markets. This strategic partnership model demonstrates how Chinese battery companies integrate vertically to secure critical material supplies.

LFP Technology Gains Global Market Share

Furthermore, lithium-iron-phosphate batteries captured nearly half of the global electric vehicle battery market in 2024 according to the International Energy Agency. LFP technology offers significant advantages including lower manufacturing costs and enhanced safety performance compared to ternary battery alternatives. These benefits drive increasing adoption across automotive manufacturers seeking cost-effective energy storage solutions.

As a result, the Wanrun-CATL partnership positions both companies advantageously within the rapidly expanding LFP segment. China's dominance in LFP production creates competitive advantages for domestic battery manufacturers while supporting the country's electric vehicle industry leadership. The supply agreement reinforces China's integrated approach to battery supply chain control from raw materials through finished products.

The Metalnomist Commentary

The Wanrun-CATL supply agreement exemplifies China's systematic approach to battery supply chain integration, securing critical materials access while driving technology innovation through strategic partnerships. This 1.32 million tonne commitment reflects both companies' confidence in LFP technology's long-term market prospects and China's continued dominance in global battery manufacturing despite increasing international competition.

Vulcan Lithium Hydroxide Project Advances as German Construction Begins

Vulcan Lithium

Vulcan lithium hydroxide project development has moved into major construction in Germany, marking a key step for Europe’s domestic battery materials supply chain. Australian-listed Vulcan Energy has started building its 24,000 t/yr Lionheart lithium hydroxide project in the German state of Hesse.

The Vulcan lithium hydroxide project is scheduled to produce first output in 2028. The construction start follows Vulcan’s receipt of a six-year commercial production licence for the facility in March.

The Vulcan lithium hydroxide project is strategically important because Europe remains heavily dependent on imported lithium chemicals for battery manufacturing. Local lithium hydroxide production could support electric vehicle, battery cell and cathode supply chains across the region.

Vulcan plans to produce battery-quality lithium from low-impurity geothermal subsurface brines. The company will use direct lithium extraction technology, linking lithium production with geothermal resource development in the Upper Rhine Valley.

Geothermal Brines Support Europe’s Local Lithium Strategy

The Lionheart project is part of Europe’s broader effort to build domestic critical minerals capacity. Lithium hydroxide is a key input for high-nickel cathode chemistries used in electric vehicle batteries.

Vulcan’s route is different from conventional hard-rock lithium mining or evaporation pond production. The company plans to extract lithium from geothermal brines, then process it into battery-quality lithium hydroxide.

This matters because direct lithium extraction can reduce land use and accelerate processing compared with traditional evaporation routes. However, DLE projects still face technical and commercial execution risk because each brine system has different chemistry and operating requirements.

Construction of the surface extraction plant at Landau in the Upper Rhine Valley began in February. This upstream extraction work is critical because the lithium hydroxide plant depends on reliable brine supply and stable lithium recovery.

The project’s low-impurity geothermal brine base could give Vulcan a useful advantage if it can scale the process reliably. Battery customers require consistent quality, traceability and long-term supply security.

Public Funding Highlights Strategic Battery Materials Push

The Lionheart project received around €104mn in funding from Germany’s federal government and the states of Rhineland-Palatinate and Hesse last year. This public support shows how lithium processing has become an industrial policy priority in Europe.

Germany has a major automotive industry and is expanding battery manufacturing capacity. Domestic lithium hydroxide production could reduce exposure to overseas conversion hubs and strengthen regional supply resilience.

The project also fits Europe’s push to localise more of the battery value chain. Mining or extraction alone is not enough. Europe needs lithium chemicals, cathode materials, battery cells, recycling and downstream qualification with automakers.

Vulcan’s 24,000 t/yr planned capacity would not satisfy Europe’s full lithium demand. However, it could become a meaningful regional source if production starts as planned in 2028.

The next challenge is execution. Vulcan must complete construction, prove DLE performance, operate the geothermal brine system and qualify lithium hydroxide with battery customers.

The Metalnomist Commentary

Vulcan’s construction start shows that Europe’s battery supply-chain strategy is moving from policy ambition to industrial buildout. The project’s success will depend on whether geothermal brine extraction and lithium hydroxide conversion can scale reliably enough to meet automotive-grade standards.