Thematic Spotlight: Renault Looks for Cheaper Batteries

Car manufacturing giant Renault SA is aiming to reduce battery costs on its electric vehicles (EVs) by up to 20% over the next three years.¹ The company’s “Ampere” unit will look to do so by developing a full value chain for Lithium Iron Phosphate (LFP) batteries alongside traditional Nickel Manganese Cobalt (NMC) batteries in Europe by 2026.² The EV maker says the new chemistry will allow for much lower input costs, which would improve profit margins and help the firm reach price parity with internal combustion engine (ICE) peers.

Another reason Renault has opted for this new approach is to combat the growth of cheap Chinese EVs that have come to occupy significant market share in the EU over the past few years.³ Historically, western car manufacturers heavily favoured NMC batteries for their high energy density. While LFPs are faster to charge, less toxic to mine, and much less prone to combustion, they were heavier and less efficient energy stores – making them unviable for EVs.⁴ However, recent technological developments by leading battery manufacturers have seen LFPs rapidly bridge its energy density gap. Just this April, Contemporary Ampere Technology (CATL) announced its reasonably sized LFP batteries could offer up to 1000km of range in a single charge.⁵ CATL and other Chinese EV providers have been leaders in the development of LFP battery technology over the past few years, and the build out of a comprehensive LFP supply chain has been at the heart of the country’s EV dominance. Renault will no doubt be hoping to emulate some of that success with its domestic investments.

Renault is not the only EV manufacturer considering investment in cheaper battery technology to improve profit margins and lower costs. Mercedes, Stellantis, and Total Energies paused two of their three on-going battery projects last month in preparation for a pivot to making cheaper battery cells.⁶ VW also recently signed a US$5 billion pact with Rivian to develop battery platforms for more affordable EVs.⁷

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