Research Triangle Energy Consortium

The February 12 print edition of the NY Times had a piece under the Climate Forward banner on A2.  It observes that policy actions have led to a decrease in demand for electric vehicles (EVs), and that at least two auto manufacturers are pivoting to repurposing battery manufacturing to supply the market for storage in support of two areas with relatively robust demand. These are electricity grids with intermittency in renewable power and data centers.

First, the premise.  Certainly, policy measures by the government, especially the repeal of the tax credit, have reduced the consumer demand for EVs in the US.  Equally, grids continue to add renewable capacity, in part due to demand and in part due to solar electricity today being the lowest-cost form of energy.  However, due to low capacity factors, and temporal fluctuations, this source requires storage as backup. The most ubiquitous storage means are batteries. 

The newest entrants into the power demand sweepstakes are data centers, as noted in the NYT piece.  The owners of these power hogs prefer electricity that is substantially carbon free.  Microsoft went so far as to enable de-mothballing of the Three Mile Island conventional nuclear plant and guaranteeing offtake at a heavy premium to prevailing prices in the region.  Expect also more “behind the meter” capability, meaning not acquired from the grid. This business model is a net benefit to consumers in the region because the cost will not be passed on to them.

The pivot to repurpose EV batteries to grid support applications is informed by the fact that EV batteries have two distinct cathode chemistries, and one is more suited to the stationary application. For the same storage capacity, the Nickel Manganese Cobalt (NMC) variant is lighter, but more costly than the Lithium Iron Phosphate (LFP).  In the EV application the lightness often trumps the cost element primarily because longer range can be achieved with manageable addition to weight.  Longer range and fast charging have emerged as dominating features sought by customers, especially in the higher end sedan and SUV lines. This has resulted in the vast majority of passenger EVs being powered by NMC batteries. In fact, to my knowledge, the only passenger EV using LFP batteries is the Tesla Model 3 with rear-wheel drive.  This is a vehicle that targets the lower cost and limited range market segment.  Pickup trucks are more suited to LFPs because they can generally tolerate the extra weight.  The standard range Ford 150 Lightning uses LFPs and the extended range one uses NMCs.

To recap, defining characteristics of batteries in EV applications are high energy density and light weight, allowing for greater range before requiring recharging.  By contrast, grid support batteries are not too bothered by these characteristics, because space is not at a premium, and the extra weight is tolerated in exchange for lower prices.  But they prioritize the feature of longer life, defined by surviving more numerous charge/discharge cycles.  This is because grid support requires batteries to be recharged much more frequently than in the motive application.

LFP batteries were invented by Prof. Goodenough at the University of Texas, Austin. He shared the Nobel Prize with two others in 2019 for lithium-based batteries as a class.  While invented in the mid-1990s, LFPs were initially shunned by EV manufacturers. The defining characteristic of an LFP is the longer life. These batteries last for over 4 times as many charge/discharge cycles as NMC equivalents.  All rechargeable battery lives benefit from not fully charging or discharging, and NMC batteries, including the ones in cell phones, last longer if charged just to the 80% level.  LFP batteries are something of an exception in that a full charge to 100% has minimal impact on life. Another in the plus column for LFPs.  A further plus is that LFP batteries are also believed to be safer.

The use of iron in place of more scarce imported cobalt, manganese and nickel is preferable from a resilience standpoint. Compared to the other metals, the price of iron is greatly lower and more stable.  Cobalt has been particularly volatile, ranging from USD 22,000 to 94,000 per metric ton over the last eight years. Importantly, much of the volatility on the upside has been attributed to EV demand.

Now to the pivot.  All EV batteries could, in principle, be used in the grid support market.  But as noted above, LFPs are more suited, and their preferential use will likely stabilize the price of cobalt, thus benefiting the NMC market. Further, manufacturers of the LFP variant will have cost and desirability advantages in serving the grid market and, to a degree, in competing with Chinese imports.  A NYTimes story on February 16 notes that the F15 Lightning battery plant in Tennessee is being shut down but may re-start to serve storage. They can manufacture both types but would be well served to make just LFPs. Absent tariffs, NMC batteries will have a tough time competing with imported LFPs.

In conclusion, the pivot makes more sense for the LFP* than for the NMC EV battery variant.

* The slow one now, will later be fast, from The Times They are a Changin’ (1964), written and performed by Bob Dylan

Vikram Rao

February 21, 2026

Tagged: climate-change, electric-vehicles, energy, sustainability