LFP Happened. One Chemistry Shift Rewrote the Demand Profile for Every Battery Material Simultaneously.
Five years ago, nickel was the battery metal that mattered most. The entire industry was moving toward nickel-rich cathodes. Higher nickel meant higher energy density, longer range, and premium positioning for EV manufacturers competing on specification. Investors piled in accordingly. Then LFP happened.
LFP battery market share went from 19% of the global total in 2020 to 55% in 2025. Lithium iron phosphate is now the dominant global battery chemistry by market share, having been a minority chemistry in 2020. That single chemistry shift rewrote the demand profile for every battery material simultaneously. Lithium nearly quadrupled in production volume. Phosphorous grew 41%. Graphite grew meaningfully. And nickel, which was supposed to be the decade’s defining battery metal, grew too, but at a fraction of the rate the bull case required. The nickel investors who bought the battery super-cycle thesis at the top are still underwater.
The Winners: Lithium, Phosphorous, and Chemistry-Agnostic Materials
Lithium is the clearest winner regardless of chemistry. Battery-grade lithium production nearly quadrupled from approximately 395,000 tonnes to around 1,500,000 tonnes LCE between 2020 and 2025, according to Benchmark Mineral Intelligence. Every battery format needs lithium. NMC, NCA, LFP, and the solid-state architectures coming next all require lithium. The demand is chemistry-invariant. It does not matter which cathode wins, lithium wins with it.
Phosphorous, produced as purified phosphoric acid for LFP batteries, grew approximately 41% from approximately 4,100,000 tonnes to approximately 5,800,000 tonnes over the same period. As the article published previously in this series on LFP feedstocks documented, phosphorous is now the dominant battery material by volume, at nearly four times the volume of lithium on an absolute weight comparison. That growth is a direct function of LFP’s market share expansion.
Graphite grew from approximately 907,000 tonnes to approximately 1,300,000 tonnes between 2020 and 2025. LFP uses a graphite anode in its standard formulation, so graphite has benefited from LFP’s market share gain even as it would have benefited from NMC growth as well. It is among the materials that grew with the battery market overall.
The Complicated Picture: Cobalt and Manganese
Cobalt more than doubled in production volume from approximately 127,000 tonnes to approximately 270,000 tonnes between 2020 and 2025. But cobalt’s trajectory tells a story of shrinking long-term strategic importance even as the absolute volumes grew. LFP contains no cobalt. Cobalt’s role in NMC cathodes has been progressively reduced as high-nickel formulations, which use less cobalt per unit energy, have taken share within the NMC segment. The direction of travel for cobalt in battery applications is volume growth in the near term from an expanding total battery market, followed by share erosion as the chemistries that use it grow more slowly than those that do not.
Manganese nearly doubled from approximately 55,000 tonnes to approximately 106,000 tonnes in the battery context. Manganese is used in LMFP (lithium manganese iron phosphate), an LFP variant, and in NMC cathodes with varying manganese content. It has benefited from the overall battery market expansion without being as directly tied to any single chemistry.
The pattern across cobalt and manganese is one of materials that are useful across multiple chemistries but do not have the kind of necessity claim that lithium has. They grow with the battery market but their share trajectory is dependent on which specific formulations of NMC and LFP win in each application segment.
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The Disappointed Bull Case: What LFP Battery Market Share Did to Nickel
Nickel grew from approximately 2,500,000 tonnes to approximately 3,600,000 tonnes in battery-relevant production terms between 2020 and 2025. That is real growth. But it is not the growth the nickel bulls who bought the battery super-cycle thesis were pricing. The bull case for nickel as the decade’s defining battery metal rested on NMC dominance, specifically high-nickel NMC 811 and NMC 9-series cathodes that required significantly more nickel per kilowatt-hour than the NMC 622 formulations they were expected to replace.
LFP’s rise undercut that thesis structurally. When LFP went from 19% to 55% of the market, it was not the nickel-rich NMC formulations gaining market share. It was a competing chemistry that uses no nickel at all. A 55% LFP market combined with a 45% NMC and other market means that roughly half the battery market is completely indifferent to nickel supply or pricing. The LME nickel price collapsed from above USD 30,000 per tonne to below USD 16,000, compounded by Indonesian supply flooding the market simultaneously.
The nickel bulls who bought the battery super-cycle thesis at the top are watching their thesis erode in real time. Not because nickel demand is falling in absolute terms, but because the demand trajectory that justified the thesis requires NMC to win the chemistry competition, and LFP has been winning it consistently since 2021.
Battery Materials Are a Volume Story and a Substitution Risk Story
The investors and companies that bet on a single chemistry staying dominant got caught by LFP’s cost advantage and China’s manufacturing preference. China’s battery manufacturing ecosystem, which produces the majority of the world’s lithium-ion cells, converged on LFP for mass-market applications because it is cheaper to produce, thermally stable, and does not require cobalt or high-grade nickel. That convergence was driven by economics and manufacturing scale, not by performance specification. The same midstream concentration shows up elsewhere in critical minerals, where rare earth refining capacity outside China remains marginal against Chinese processing scale.
The lesson is explicit: knowing which battery materials grow is not sufficient for positioning in the battery materials market. You need to know which chemistries win in which application segments. The same growth rate for the overall battery market can produce very different outcomes for lithium, nickel, cobalt, and phosphorous depending on whether LFP or NMC is capturing the incremental volume. The same discipline applies upstream, where the copper investment gap is a question of financeability rather than capital availability.
Looking forward, the solid-state battery architectures that Samsung SDI, Toyota, and others are commercialising introduce yet another substitution dimension. Samsung’s silver-carbon anode design eliminates the graphite anode and introduces silver. A different solid-state design might eliminate lithium-based cathodes in some form. Battery materials growth is real. The substitution risk within that growth is the analytical challenge that the nickel bull case failed to incorporate.
Key Takeaways
- LFP went from 19% to 55% of global battery market share between 2020 and 2025. That single chemistry shift rewrote the demand profile for every battery material simultaneously. Lithium nearly quadrupled (395 to 1,500 kt LCE). Phosphorous grew 41% (4,100 to 5,800 kt). Graphite grew from 907 to 1,300 kt. Cobalt more than doubled (127 to 270 kt) but its long-term share is shrinking. Nickel grew (2,500 to 3,600 kt) but far below the bull case.
- Lithium is the winner across every chemistry: every battery format, NMC, NCA, LFP, and the solid-state architectures coming next, requires lithium. Nickel bulls who bought the battery super-cycle thesis resting on NMC dominance are still underwater as LFP has captured the mass-market volume they expected NMC to hold.
- Battery materials are a volume growth story and a substitution risk story simultaneously. Knowing which materials grow is not sufficient. You need to know which chemistries win. Solid-state battery architectures introduce yet another substitution dimension. The 2020 to 2025 period demonstrated that a single chemistry shift can rewrite every battery material’s demand profile at the same time.
FAQ
How did LFP batteries grow from 2020 to 2025?
Lithium iron phosphate (LFP) battery chemistry grew from approximately 19% of global battery market share by GWh in 2020 to approximately 55% by 2025, according to Benchmark Mineral Intelligence data. This made LFP the dominant global battery chemistry by market share for the first time, having been a minority chemistry in 2020. The growth was driven by LFP’s cost advantage, particularly in China where it requires no cobalt or high-grade nickel, its thermal stability, and its suitability for mass-market EVs and stationary storage applications where energy density per kilogram is less important than cost and cycle life.
Which battery materials won and lost from LFP’s rise?
Lithium won across every chemistry, nearly quadrupling from approximately 395,000 to 1,500,000 tonnes LCE between 2020 and 2025, because every battery format requires it. Phosphorous won directly from LFP’s growth, rising 41% to approximately 5,800,000 tonnes of purified phosphoric acid. Graphite grew from 907,000 to 1,300,000 tonnes. Cobalt more than doubled in volume (127,000 to 270,000 tonnes) but its long-term share is shrinking as chemistries requiring less cobalt dominate. Nickel grew (2,500,000 to 3,600,000 tonnes in battery-relevant production) but at a fraction of the rate the pre-LFP NMC bull case projected, because LFP uses no nickel.
What was the nickel battery super-cycle thesis and why did it fail?
The nickel battery super-cycle thesis held that the growth of electric vehicles would drive surging demand for nickel sulphate as NMC cathode chemistries, particularly high-nickel formulations like NMC 811, became dominant in EV batteries. The thesis anticipated nickel as the defining battery metal of the decade. LFP’s rise undercut this by capturing mass-market EV and stationary storage volume with a chemistry that uses no nickel at all. Combined with Indonesian supply flooding the market after Jakarta’s 2020 nickel ore export ban, the LME nickel price collapsed from above USD 30,000 to below USD 16,000. Nickel production grew in absolute terms but far below the rate the bull case required.
What does the LFP substitution shift mean for solid-state batteries?
The LFP substitution shift demonstrates that battery chemistry outcomes can rewrite the demand profile for every battery material simultaneously. Solid-state batteries introduce a further substitution layer. Samsung SDI’s silver-carbon anode design eliminates the graphite anode and introduces silver as a structural cell component. Other solid-state designs eliminate liquid electrolytes entirely and may use different cathode formulations. Investors in battery materials who do not explicitly model chemistry outcomes risk the same positioning error as the NMC nickel bulls: allocating to a material on the assumption that a specific chemistry will dominate, only to find the market has converged on a different approach.
This analysis is from The Drill Down, a daily briefing on critical minerals, junior mining, and capital markets. Join 3,200+ investors and operators who read it before the market opens.
Sources
Benchmark Mineral Intelligence April 2026; Visual Capitalist April 2026; LME market data.
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