Norway bets on LFP batteries to challenge China’s EV dominance

Europe may have found a way to reduce its dependence on cheap Chinese electric vehicle (EV) batteries: in one small Norwegian town.

China has pulled far ahead in EV manufacturing in recent years, largely thanks to cheaper batteries. BYD, SAIC and other Chinese brands now account for five of the world’s top 10 EV makers, a sharp reversal from four years ago when Tesla, Volkswagen and Renault-Nissan-Mitsubishi dominated global sales, according to Politico. 

One factor explains much of the shift: the rise of lithium iron phosphate (LFP) batteries, which Chinese companies have adopted at scale. Compared to the nickel-manganese-cobalt (NMC) batteries still widely used in Europe and the U.S., LFP batteries are cheaper, last longer and are more sustainable — even if NMCs still allow for longer driving ranges.

“[China has] a huge cost advantage through economies of scale and battery technology. European manufacturers have fallen well behind,” David Bailey, professor of business and economics at Birmingham Business School, told the BBC. “Unless they wake up very quickly and catch up, they could be wiped out.”

But Europe now has a potential answer: Morrow Batteries, a company majority-owned by renewable energy giant Å Energi. Based in Arendal, Morrow recently began producing LFP batteries for energy storage systems and defense equipment. If successful, it plans to expand production to vehicles, with three new facilities slated to open by 2029.

Å Energi founded Morrow four years ago in partnership with ABB, Siemens, the Danish pension fund PKA and Norwegian investment firm Nysnø. Crucially, the venture has also secured backing from the Norwegian government and the EU.

Battery projects in Europe have faced setbacks before — Swedish startup Northvolt and the U.K.’s Britishvolt both went bankrupt in recent years. But industry experts argue that LFP batteries are Europe’s best bet to compete with Chinese producers and secure supply chains for the EV transition.

It’s fitting that the pioneering factory is in Norway, where EV adoption leads the world. Nine in ten cars sold in the country in 2023 were electric, and the government has set a goal that all new car sales by the end of 2024 be zero-emission. Norway may not have a domestic car industry, but it is positioning itself at the center of the EV battery revolution.

Morrow may struggle financially in its early years, but its backers believe the long-term payoff — for Norway, for Europe’s auto industry, and for the climate — will be worth it.

As the arrival of the Arendal factory shows, the future of clean technology will depend not only on markets but also on partnerships across borders, sectors and governments. In the green transition, immediate profit can no longer be the only priority.

By Sabina Mammadli