China Restricts Export of LFP BESS Technology Now

Even as global firms dependent on China for supplies are still to come to terms with the restrictions on rare earth magnet imports from that country, China has quietly added another critical item to its expanding export control list. This time, it is Intellectual Property— in particular, the latest technology for manufacturing LFP batteries.

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Export Licences Now Mandatory for Interested Firms

The restrictions have been listed in the official catalogue (formally known as the ‘Catalogue of Technologies Prohibited and Restricted from Export from China’), which is compiled by the Ministry of Commerce in conjunction with the Ministry of Science and Technology. It covers preparation technologies for battery cathode materials, including lithium iron phosphate, lithium manganese iron phosphate, and phosphate cathode raw materials. These are critical to batteries used in the electric mobility sector as well as stationary storage.

Announced on July 15, the move will effectively limit manufacturing using the latest technologies for LFP production outside China. Firms will need to develop their own intellectual property — a lengthy process that could take years — or settle for relatively outdated technology.

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The update from the Chinese government also adds to existing restrictions on non-ferrous metallurgy technology, adding control points for spodumene-based lithium carbonate and lithium hydroxide production, metal lithium and lithium alloy preparation, brine lithium extraction, and lithium-containing purification liquid preparation. It also adjusts requirements for gallium metal extraction.

LFP Battery Dominance

Over the past three years, LFP batteries have surpassed NMC batteries in both electric mobility and stationary storage applications. China has led this shift, with firms such as CATL and BYD dominating through large-scale manufacturing and technological innovation, which have significantly reduced costs. Chinese LFP cells now offer much higher charging capacities, ensuring that LFP manufacturing worldwide retains a strong Chinese presence, either through partnerships or as technology providers.

The latest restrictions seem to target the export of LFP 4th generation technologies (powder compaction density 2.6 g/cm³). Currently, over 90% of LFP cells in use worldwide are being made in China. 

India Impact

India, where a special performance-linked incentive (PLI) scheme for batteries seeks to create a battery manufacturing ecosystem, will face significant challenges, as most firms count on Chinese suppliers for machinery. Restrictions on technology transfer now will limit their access to the latest innovations. It will, of course, help China maintain its dominance and lead in the global market with the obvious cost and efficiency advantages for local Chinese players. With little respite yet on the rare earth magnets issue, which has already forced many firms to cut down on their EV production plans, the latest move from China promises to squeeze harder where it hurts — on India's plans to build a level of self-sufficiency in battery manufacturing. The problem will only go away with political engagement, and China seems to be in no hurry to do that.