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NIO and Leapmotor Embrace LFP Batteries for Cost Reduction and Competitive Edge
In the rapidly evolving electric vehicle (EV) market, companies are continuously seeking ways to reduce costs and improve competitiveness. Two significant players, NIO and Leapmotor, are following this trend by adopting lithium iron phosphate (LFP) batteries, similar to the strategy employed by BYD.
NIO, a leading EV manufacturer, aims to reduce the cost of its cars by switching to LFP batteries. This move is expected to make NIO's vehicles more affordable and competitive in the price-sensitive market. In line with this strategy, NIO will include LFP batteries in its battery-as-a-service (BAAS) program, making high-end EVs more accessible.
The highly anticipated flagship model ET7 from NIO will feature an LFP battery option, reducing its price. The performance variant ES6 and the EC6 offer impressive cruising ranges of 460km and 470km NEDC, respectively, with LFP batteries.
CATL, a prominent battery supplier, will resupply the LFP batteries for NIO. CATL currently supplies NIO with ternary li-ion batteries, which have higher energy density but higher costs. The switch to LFP batteries is expected to reduce the manufacturing costs and lower vehicle operating costs for NIO.
NIO's move towards LFP batteries follows the footsteps of Tesla and Xpeng, who have also adopted this strategy. Xpeng recently launched a $25,000 P5 sedan, and IM Motors is launching a "Super Extended Range" EV with a 66kWh battery on August 1.
While exact market shares for the first half of 2021 (H1 2021) are not available, CATL and BYD held significant shares in China's power battery market. In H1 2025, CATL and BYD held a combined 66.6% market share, with CATL accounting for 43.05% and BYD for 23.55%. The market concentration between these two companies has slightly declined due to increasing competition and growth in the LFP battery segment.
In summary, NIO's shift towards LFP batteries is a strategic move aimed at reducing costs and improving competitiveness. This move follows the trend set by other prominent EV manufacturers, and the market shares of key players like CATL and BYD continue to dominate the China power battery market. However, for precise H1 2021 data, specialized industry reports from that year should be consulted.
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- In the finance sector, the competitive nature of the electric vehicle (EV) industry is driving companies like NIO and Leapmotor to explore cost-saving measures, such as adopting lithium iron phosphate (LFP) batteries.
- As personal-finance considerations rise among consumers, the adoption of LFP batteries by NIO and others is expected to make electric vehicles more affordable, potentially increasing market penetration.
- The boom in the transportation industry, especially electric cars and electric-vehicles segment, is now seeing a ripple effect in the technology industry, as shown by the increased use of LFP batteries in EV manufacturing.
- Businesses in the lifestyle sector may also benefit from the decreasing costs of electric vehicles, thanks to the strategies adopted by companies like NIO, which could lower the overall cost of ownership for high-end EVs.
- Amidst the rise of electric vehicles, the automotive industry is undergoing significant changes, with emerging players like NIO and Leapmotor making strategic decisions like switching to LFP batteries to achieve cost reduction and maintain a competitive edge in the market.
