BMW Confirms Plan to Use Cheaper LFP Batteries in New EVs

BMW is planning to incorporate lithium iron phosphate (LFP) batteries into its upcoming Neue Klasse electric vehicles, a move that could allow the manufacturer to offer more affordable entry-level options without sacrificing the brand's premium positioning.

What Happened

During BMW’s third-quarter earnings call, CEO Milan Nedeljkovic confirmed that the company will expand its use of LFP technology for Neue Klasse EVs. While BMW currently considers the cylindrical nickel-manganese-cobalt (NMC) cells used in most of its new EVs to be superior for range, Nedeljkovic acknowledged that LFP offers a different balance of cost and performance. The CEO specified that the integration of LFP will be selective, noting, "We will add the LFP technology in our vehicles, but we will be very specific in which vehicle and for which purpose." He did not name the specific models that will receive the upgrade or provide a launch date for these variants outside of China.

This strategy mirrors the approach already taken in the Chinese market, where the entry-level long-wheelbase iX3 30L features a 77-kilowatt-hour LFP battery. This variant has a claimed CLTC range of 630 kilometers (391 miles), compared to the NMC-equipped 40L and 50L versions. The source indicates that a compact, Euro-focused Neue Klasse EV, scheduled for 2028, is a likely candidate for LFP adoption, though this remains unconfirmed.

Why It Matters

The shift toward LFP chemistry addresses a segment of buyers who prioritize cost efficiency over maximum range. LFP batteries utilize inexpensive iron and phosphate for the cathode, avoiding the costly nickel and cobalt required for NMC cells. Additionally, LFP batteries are known for high longevity, thermal stability, and resilience to degradation from frequent fast charging to 100%. However, the trade-off is lower energy density, which makes NMC preferable for long-distance applications. By offering LFP variants, BMW follows competitors like Mercedes, which provides an entry-level electric CLA with a 58-kWh LFP pack alongside larger NMC options, allowing customers to choose between a lower sticker price and extended range.

Despite the potential for cost savings, BMW’s expansion of battery sourcing includes deals with Samsung SDI for European Gen6 cells and LG Energy Solution for U.S. supply. These agreements do not specify that the cells will be LFP, and local production does not guarantee lower costs. The source notes that even with cheaper battery chemistry, BMW’s badge will continue to command a premium, meaning its LFP-equipped vehicles will likely remain more expensive than comparable offerings from mainstream brands.

The Bottom Line

BMW is introducing LFP batteries to its Neue Klasse lineup to target budget-conscious buyers, following a successful precedent in China with the iX3 30L. While this move leverages the cost and durability advantages of LFP chemistry, the company has not promised direct price reductions, and premium pricing is expected to persist due to brand positioning.