The car industry is constantly striving to improve the performance and features of vehicles, while reducing costs. The industry must look beyond raw materials towards transformation of battery manufacturing to reduce cost – combining lithium iron phosphate (LFP) cathode active material with dry electrode coating will deliver the greatest benefits, explains Rory McNulty, Senior Technology and Market Analyst, Anaphite.
The transition from internal combustion engine (ICE) vehicles to electric vehicles (EVs) is well underway but adoption rates are falling behind projections in many markets, and several OEMs have revised their timelines for EV-only portfolios. While some cite the need for a step increase in EV range or charge time achieving parity with filling a tank with petrol or diesel, the barrier to mass adoption is ultimately far simpler: cost. Given that battery packs can account for up to 40% of an EV’s total cost, mass market displacement of ICE vehicles remains an existential challenge for OEMs struggling to narrow the price gap between ICE and EV.
This challenge still exists today despite the extraordinary cost reduction that the battery industry has achieved over the past decade: pack prices have fallen from more than $1,000/kWh in the early 2010s to a global weighted average of $108/kWh today, while battery energy storage system (BESS) pack prices have reached $70/kWh[1]. This remarkable level of progress has been driven by a combination of supply chain maturation, active material optimisation at the cathode and anode level, and improvements in inactive material design and pack engineering. Together, these advances have streamlined the entire value chain while simultaneously improving performance and reducing raw material intensity. Today, the cathode active material (CAM) represents 40–55% of total cell cost, with manufacturing overheads contributing 20–30%, a strong testament to the extent of supply chain and manufacturing cost optimisation.
Recently, battery cell costs fell sharply following the decline in raw material prices throughout 2023. But as commodity prices recover, further cost reductions cannot rely on favourable market conditions alone. Instead, the industry must turn its attention to manufacturing innovation, particularly to processes that can deliver transformational improvements in process energy efficiency, yield, and throughput. Among these, dry electrode coating technologies represents one of the most compelling opportunities – especially when applied to LFP cells.
Opportunities such as these must be seized if EVs are to become more affordable than their ICE counterparts and tip the mass market balance – in Europe last year EVs accounted for one in every five cars sold – and for the proposed new ‘Small Electric Vehicle’ class in particular, battery costs will be critical to their success.
LFP: dominant in China and gaining momentum in the West
The widespread adoption of nickel manganese cobalt (NMC) cells in Western markets reflects the priorities of early EV adoption. Delivering the range that was needed to make EVs a viable alternative to ICE vehicles required high gravimetric and volumetric energy density: these attributes favoured NMC materials over LFP. In parallel, incremental improvements across the battery supply chain delivered steady cost optimisation, reinforcing NMC’s position as the chemistry of choice for the EVs designed and manufactured in Europe and North America.
LFP followed a very different trajectory. Cells containing first-generation LFP were constrained by their low cell-level energy density of around 160Wh/kg, compared with 220-300Wh/kg for NMC, leading to broad consensus that its role would be limited to low-cost, low-performance segments. However, Chinese manufacturers focused substantial R&D effort on LFP, and in 2023 the industry saw the emergence of second-generation LFP, which improved cell-level energy density from an upper limit of 160Wh/kg to around 180Wh/kg.
These gains were achieved through a combination of synthesis optimisation and particle engineering to improve compaction density. This marked the beginning of an aggressive and highly effective LFP development roadmap. Now accounting for more than 80% of cathode production in China, LFP has expanded rapidly into mass market EV and battery energy storage system (BESS) applications globally.
LFP is already in its fourth-generation, with CATL stating that its LFP-powered Shenxing Plus pack has an energy density of 205Wh/kg, illustrating just how far LFP has progressed in a matter of years. Delivering this level of performance at the pack level implies an underlying cell energy density well above 205Wh/kg, representing an increase of more than 30% compared to the first-generation.
Cost reduction: refocusing from raw materials to manufacturing
As LFP cathode performance approaches its theoretical limits, cost reduction through active material improvements is diminishing and the industry must look towards manufacturing to deliver optimisation. Electrode manufacturing accounts for approximately 40% of the total energy consumed in cell production, making it an obvious focus for development.
Conventional cathode manufacturing relies on wet coating. The active materials, binders, and conductive additives are dispersed in a highly toxic, flammable solvent – N-methyl-2-pyrrolidone (NMP). The resulting slurry is coated onto an ultra-thin current collector foil before passing through massive drying ovens, typically operating at line speeds of up to 100 metres a minute.
Large volumes of air heated to ~200°C must be circulated through the ovens to rapidly dry the electrode, and prevent the accumulation of NMP vapour, before being cooled for solvent capture and then reheated for solvent purification. It’s an inherently energy-intensive process: removal and recovery of NMP accounts for more than 85% of cathode manufacturing energy consumption.
For LFP, these challenges are amplified. Slurries have a lower achievable solids content which, when combined with LFP’s lower energy density relative to NMC, means that approximately 140% more NMP must be processed per kWh of LFP cells produced. This makes the cost and carbon footprint of LFP electrode manufacturing a massive opportunity for optimisation.
Dry electrode coating: reducing energy consumption and emissions by design
Dry electrode manufacturing aims to eliminate solvents and drying ovens altogether, dramatically reducing both energy consumption and complexity. In conventional approaches, the active materials, binders, and conductive additives are mixed as solids and then laminated directly onto the current collector.
In practice, achieving a homogeneous mixture under the high shear forces imposed without damaging the materials, introducing impurities, or accelerating equipment wear is highly challenging. As a result, it is proving challenging to deliver mixing times, equipment durability, and electrode performance that is comparable to wet-coating industry benchmarks.
Anaphite has taken a different approach. With a proprietary, chemistry-based process, Anaphite produces Dry Coating Precursor (DCP®): a homogeneous composite powder engineered for high throughput dry coating. This approach retains the benefits of slurry mixing and coating, while delivering the energy efficiency and more streamlined manufacturing process of dry electrode coating.
The impact is significant. Dry coating using DCP® technology can reduce energy consumption of solvent drying and recovery by more than 90%, translating to reductions of more than 75% in overall electrode manufacturing energy consumption and carbon footprint, alongside cell-level cost reductions of up to 5%.
Combining LFP with dry electrode coating: maximising the benefits
The characteristics of LFP magnify the benefits of dry electrode coating. The high NMP demand per kWh in conventional wet coating means that eliminating solvent handling delivers transformational processing energy and cost savings. With bill of materials costs already tightly optimised through the supply chains for iron and phosphorus, manufacturing efficiency is likely to be the primary driver of further LFP cell cost reduction.
Some Chinese LFP cells fell below $40/kWh in 2025, highlighting how low prices can go. Applying Anaphite’s DCP® technology to LFP cathode production can reduce electrode processing costs by approximately 85%, enabling further reductions in both the cost and carbon footprint of batteries manufactured for mass market EVs.
Furthermore, Anaphite’s commercial strategy reflects the realities of industrial adoption. Rather than requiring manufacturers to overhaul entire production lines at great cost, DCP® technology can be integrated into existing gigafactories, reducing capital expenditure and scale-up risk. For manufacturers building new LFP cell manufacturing capacity in Europe and North America, DCP® represents an opportunity to establish a clear manufacturing efficiency advantage from day one.
As battery materials reach maturity and commodity-driven cost reductions diminish, it is manufacturing-efficiency above all else that will define the next phase of competitiveness. Dry electrode manufacturing is a practical, scalable solution, which delivers immediate impact, and those who combine it with LFP will secure a meaningful and lasting advantage in the race to deliver affordable, sustainable mass-market electrification.
