Korean battery makers are nearing the launch of cost-effective lithium iron phosphate batteries — a market long dominated by China — as part of their strategy to navigate a downturn in electric vehicle demand. The key question: Can they compete in a field where Chinese rivals have secured a strong foothold for years through unmatched price advantages?

Industry insiders say success will hinge on whether Korean-made cells can narrow the price gap enough to compete head-on with China, through innovations in both manufacturing processes and product design.

According to industry sources, the nation's top two battery makers — LG Energy Solution and Samsung SDI — are in the final stages of completing their LFP technology, with mass production planned in the coming years.

“They have started safety testing of prototypes,” said an industry source familiar with the matter who wished to remain anonymous, suggesting the development has reached its final stage.

Last year, LG Energy Solution secured a five-year supply deal for LFP pouch cells with Renault Group, enough to power approximately 590,000 electric vehicles. Samsung SDI is also reportedly in talks to secure orders with multiple automakers.

For both companies, the strategic focus is on either significantly reducing production costs, or developing higher-capacity LFP cells that offer longer driving ranges than their Chinese counterparts.

“To improve capacity, Korean companies are likely to incorporate materials such as manganese into LFP chemistry, despite the added cost,” said another source who requested anonymity. “The key is to ensure the price doesn’t rise to the level of NCM batteries, which are 20–30 percent more expensive than LFP. Ideally, the price gap with Chinese products should remain under 10 percent.”

The source added that reducing material usage is a practical way to challenge Chinese dominance. “For instance, in the battery electrode process, which involves applying a thin layer of cathode slurry onto aluminum foil, Korean cells may require only 80 coatings compared to 100 for Chinese ones. From a Korean manufacturer’s perspective, this means lower material input but similar capacity output.”

Instead of adding costly new materials, LG Energy Solution is focusing on cutting manufacturing costs. Its upcoming “T2X LFP” cell, set for launch by mid-2027, doubles the thickness of conventional LFP cells, effectively doubling energy density with less than a twofold increase in production costs. This enables the same energy output in one production run instead of two. Theoretically, LG could halve manufacturing costs while maintaining energy density comparable to Chinese products.

“While it’s premature to say we can significantly narrow the price gap with China, given their long-standing expertise in LFP production, we believe our products are highly competitive in markets like the US and Europe, where China faces regulatory and trade barriers,” said an LG Energy Solution official.

Meanwhile, Samsung SDI is preparing to develop its “LFP+” battery — an upgraded version of traditional LFP cells that incorporates a small amount of manganese and a new electrolyte additive. The LFP+ cell will likely contain far less manganese than NCM batteries, which typically use about 10 percent.

Samsung has also developed a hybrid that blends LFP with high-nickel content, achieving roughly a 10 percent improvement in energy density compared to conventional LFP batteries, while maintaining the safety benefits associated with LFP. Although nickel is expensive — accounting for about 40 percent of cathode costs — the limited quantity used in the blend allows Samsung to reduce the price gap with China, according to industry sources.

LG Energy Solution and Samsung SDI’s entry into the LFP market marks a significant diversification of their product portfolios, which had previously focused on higher-priced nickel, cobalt and manganese batteries for mid- to high-end EVs.

“Their previous strategies were justified, as it was nearly impossible to compete with Chinese firms on price within the same product category, due to China’s established supply chains and cost advantages in raw materials and labor,” said Lee Ho-geun, an automotive engineering professor at Daeduk University.

However, as the global EV industry faces a slowdown, catering to budget-friendly models has become increasingly important. Chinese manufacturers have also improved the energy capacity of LFP batteries, once seen as inferior to NCM cells, Lee noted.

According to market tracker SNE Research, the global LFP battery market — dominated by Chinese manufacturers — grew 53 percent last year, while the NCM market grew by only 12 percent.

By Byun Hye-jin (hyejin2@heraldcorp.com)