(Corrects story and headline to say makers pledge $11.3 billion, not $14.3 billion for lithium iron phosphate plants)

By Paul Lienert

(Reuters) – Interest and investment in lithium iron phosphate (LFP) battery cells and materials, used to power electric vehicles, continue to climb in the United States. LFP is a lower-cost competitor to nickel cobalt manganese cells.

Six companies have committed more than $11 billion in future LFP manufacturing facilities in the U.S., with others, including Tesla and Rivian, reportedly considering similar investments.

Here is a look at some of the announced LFP projects.

FORD

Ford Motor is planning to open a $3.5 billion LFP manufacturing plant in 2026 in Marshall, Michigan, using technology licensed from China’s CATL.

LG ENERGY SOLUTION

South Korea’s LGES plans to add LFP production later this year to its Holland, Michigan, battery cell plant as part of a $1.7 billion expansion.

GOTION

Chinese battery maker Gotion has announced a $2.4 billion project to make battery materials in Big Rapids, Michigan, starting in 2025.

FREYR

Norwegian battery startup Freyr expects to open a $1.7 billion battery plant outside Atlanta, using technology from Aleees and 24M. It has not specified a start date.

OUR NEXT ENERGY

Michigan startup ONE plans to start pilot production of battery cells late this year at a $1.6 billion plant in Van Buren Township.

ICL

Israel’s ICL Group has announced it will build a $400 million battery materials plant near St Louis, Missouri, to open in 2024.

(Reporting by Paul Lienert in Detroit; Editing by Matthew Lewis)

(This June 22 story has been corrected to say makers pledged more than $11 billion, not $14 billion, in paragraph 3)

By Paul Lienert

DETROIT (Reuters) – As the auto industry scrambles to produce more affordable electric vehicles, whose most expensive components are the batteries, lithium iron phosphate is gaining traction as the EV battery material of choice.

The popularity of the chemical compound known as LFP is due partly to environmental and geopolitical concerns. But technological advances have also reduced the performance gap with more widely used materials such as nickel and cobalt.

LFP, embraced by EV industry leader Tesla two years ago, has sparked new interest especially in the U.S., where a clutch of domestic and overseas manufacturers has pledged more than $11 billion in new production facilities.

Overseas, two of the world’s largest automakers, Toyota Motor and Hyundai Motor, have both announced plans in the past week to equip their future vehicles with LFP batteries, but have not disclosed plans for the U.S.

“LFP is less expensive than cobalt and nickel, and all the minerals can be obtained here in North America (which means) much lower transportation costs and a more secure supply chain,” said Stanley Whittingham, professor at Binghamton University in New York and a 2019 Nobel laureate for his work on lithium ion batteries.

The addition of manganese, a staple ingredient in rival nickel cobalt manganese (NCM) battery cells, has enabled lithium iron phosphate cells to hold more energy than previously, providing EVs with more range — up to 450 miles (724 km) on a single charge, Toyota said recently.

Michigan-based Our Next Energy, which is building a $1.6 billion battery manufacturing complex in Van Buren Township, is a proponent of LFP, according to founder and chief executive Mujeeb Ijaz, because “the materials are more abundant and sustainable, with far less risk” of fire.

“We’ve also demonstrated that you can match the range of cobalt cells with no compromise,” he said.

Tesla is among the automakers leading the quest in markets outside of China to provide lower-priced EVs – in Tesla’s case, targeting a base price of around $25,000. The use of LFP batteries should help Tesla and rivals to achieve that goal, experts say.

Ford Motor aims to open a $3.5 billion LFP cell manufacturing plant in western Michigan, leveraging technology licensed from China’s CATL, the world’s largest EV battery maker. The goal, Ford CEO Jim Farley said in February, is to lower the automaker’s cell costs to less than $70 a kilowatt-hour, from more than $100/kWh for current NCM cells.

More than 90% of LFP materials and components still come from China, said battery expert Shirley Meng, a University of Chicago professor and head of Argonne National Laboratory’s Collaborative Center for Energy Storage Science.

The rapidly increasing adoption of LFP by EV manufacturers including Tesla and Hyundai suggests those companies “are not ready to decouple from China,” Meng said. 

‘ATTRACTIVE PROPOSITION’

Battery expert Lukasz Bednarski, author of the 2021 book “Lithium: The Global Race for Battery Dominance and the New Energy Revolution,” believes automakers’ interest in building lower-priced EVs could be one of the drivers behind LFP’s rising popularity.

“LFP provides good enough performance at a lower cost, which makes it an attractive proposition for EVs for the middle class,” he said.

Bednarski added that the U.S. Inflation Reduction Act (IRA) provides incentives “for the development of the whole battery chain (with no) preference for LFP chemistry.”

Rising investment in LFP manufacturing facilities in the United States is coming not just from domestic companies like Ford and ONE.

Battery makers from Norway, Israel, South Korea and even China have committed to building U.S. facilities to produce LFP materials, components and batteries, some of which will be used not in vehicles, but in large energy storage systems.

“LFP was invented in the U.S. and first commercialized here,” said Whittingham. He said this happened before Chinese companies such as BYD and CATL “moved fast” to improve and deploy the technology, mainly in EVs. 

Now, given its continued cost advantage over NCM, he added, LFP “should be used in all grid storage systems and lower-cost cars.”

(Reporting by Paul Lienert in Detroit; Editing by Matthew Lewis)

(Reuters) -Thyssenkrupp and Industrie De Nora pushed ahead with the planned initial public offering (IPO) of their hydrogen joint venture Thyssenkrupp Nucera on Friday, setting the price range at the lower end of expectations.

The IPO will be the first in Germany since February, when shares in web hosting company IONOS debuted in Frankfurt, as stock market volatility and an uncertain economic outlook have put other company listings on the back-burner.

Nucera said up to 30.3 million shares will be offered to investors at a price between 19 euros ($20.76) and 21.50 euros, corresponding to gross proceeds of up to 566 million euros and a stock market value of as much as 2.7 billion euros.

This is at the lower end of 2 billion to 5 billion valuation range sources had forecast in April. People familiar with the matter had told Reuters earlier this week that Nucera was expected to be valued at more than 3 billion euros.

“We are on track and believe Thyssenkrupp Nucera is ready for the IPO with its attractive business model and technology for large-scale green hydrogen production,” Nucera CEO Werner Ponikwar said in a statement.

The company plans to put the proceeds into its electrolysis business.

The offer includes around 3.9 million existing shares to be sold by Thyssenkrupp and De Nora, which own Nucera in a 66:34 split. New shareholders will own around a quarter of Nucera following the IPO, while Thyssenkrupp will keep a majority.

Nucera, which engineers and builds electrolysers that are able to use electricity to split water into oxygen and hydrogen, said the offer period is expected to run from June 26 to July 5, with the first day of trading scheduled for July 7.

The fund subsidiary of BNP Paribas and Saudi Arabian sovereign wealth fund PIF have committed to subscribe to Nucera shares as cornerstone investors, while Citigroup and Deutsche Bank are acting as joint global coordinators for the transaction, it added.

($1 = 0.9152 euros)

(Reporting by Anna Mackenzie and Christoph Steitz; Editing by Kirsti Knolle, Christina Fincher, Emelia Sithole-Matarise and Alexander Smith)

By Shreyashi Sanyal, Bansari Mayur Kamdar

(Reuters) -European shares dipped on Friday at the end of a central bank policy-packed week that reinforced views that interest rates could stay higher for longer, while shares of Siemens Energy plunged as it withdrew its annual profit outlook.

The STOXX 600 index closed 0.3% lower after data showed euro zone business growth stalled this month as the downturn in manufacturing deepened.

The index has lost 2.9% for the week, posting its worst weekly performance in over three months, as investors digested more interest rate hikes from major central banks including the Bank of England, Norges Bank and Swiss National Bank, and the spectre of elevated inflation for longer.

Investors also worried about the impact of protracted tightening cycles on global economic recovery, with concerns of a recession in the UK heightening after the BoE’s larger-than-expected 50-basis-point rate hike.

“A hike was fully expected, but the magnitude of the rise surprised most,” said RBC Brewin Dolphin’s head of asset allocation, Paul Danis.

“It’s quite possible that by the time the Bank is finished hiking this cycle, the base rate ends up exceeding the 2007 peak of 5.75%.”

Germany’s DAX index shed 1.0%, leading losses among regional peers as shares of Siemens Energy sank 37.3%.

The company, which supplies equipment and services to the power sector, warned that the impact of quality problems at its Siemens Gamesa wind turbine unit would be felt for years.

The basic resources index fell for the seventh straight session, posting weekly declines of 7.9%. It was the worst performer for the week.

GSK Plc rose 4.9% after it reached a confidential settlement of a U.S. litigation over claims that the British drugmaker’s heartburn drug Zantac caused cancer.

Ocado fell 5.3% in the absence of any bid developments after soaring the day before on a news report of possible takeover interest in the online supermarket and technology group.

DATA DIGEST

While euro zone business growth stalled in June, a separate reading showed German business activity slowed notably this month.

French business activity contracted this month for the first time in five months, data showed.

“There are several headwinds, including elevated uncertainty, a drag from U.S. recession, the lag effects of ECB tightening cycle, and a less supportive fiscal stance,” said Clemente De Lucia, senior European economist at Deutsche Bank Research.

“Until mid-2024, we expect quarterly growth rates of zero or small positives at best. This will leave the economy vulnerable to further contractions or recession.”

Stock exchanges in Stockholm and Helsinki were closed on Friday.

(Reporting by Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru; editing by Eileen Soreng and Jonathan Oatis)