Estimating the Hypothetical Impact of LFP Battery Technology on the California EV Market

Much recent attention has focused on China’s sudden dominance in the global battery electric vehicle supply chain, particularly in EV battery production. This paper considers one major yet under-researched aspect of China’s EV industry: its success in developing lithium-iron-phosphate (LFP) batteries, which are less energy dense but cheaper to manufacture than the nickel-based batteries typically used outside of China. In particular, it seeks to answer if availability of LFP battery technology would have increased EV adoption in California during 2012-2021. Using historical sales and vehicle attribute data on various EV models available in California and China and an instrumental variable methodology, I estimate that between 2012-2021 in California, changing a given EV model’s batteries to LFP batteries would have increased sales by 37.5\% to 49\%.