The battery sector consumed 850,000 tonnes of nickel in 2025, representing 25% year-on-year growth, according to industry estimates. That growth rate is expected to decelerate further to 29% in 2026 (1.1 million tonnes), a significant slowdown from the 43% pace in 2024. The deceleration is directly tied to the rising market share of LFP (lithium iron phosphate) batteries, which use zero nickel.
LFP batteries accounted for 42% of global EV battery installations in Q1 2026, up from 35% in 2024 and 30% in 2023. The shift is most pronounced in China, where LFP reached 55% market share, and is accelerating in Europe as automakers launch entry-level LFP models. Tesla's Shanghai Gigafactory now produces 60% of its Megapack units with LFP chemistry.
The nickel-intensive high-nickel NMC (nickel manganese cobalt) chemistry retains its premium position in long-range vehicles, where the 25-30% energy density advantage over LFP justifies the cost. Ford, GM, and BMW continue to use NMC811 in their long-range models, each consuming 30-40 kg of nickel per vehicle.
Indonesian MHP supply is abundantly available. HPAL project capacity in Indonesia is projected to reach 450,000t/yr of nickel-in-MHP by end-2026, up from 300,000t/yr in 2025. This MHP feeds directly into the battery supply chain via Chinese precursor producers, bypassing the Class 1 nickel market entirely. MHP-to-cathode production costs are estimated at $11,000-12,500/t of nickel equivalent, well below the LME nickel price.
The LFP-driven demand shift means the nickel market's battery demand growth trajectory has structurally lowered. Where analysts once projected 1.5Mt of battery nickel demand by 2027, the current trajectory points to 1.3-1.4Mt. This reduces the urgency for new nickel mining capacity and reinforces the oversupply outlook.
The LFP shift permanently reduces battery nickel demand forecasts. For battery supply chain buyers: MHP from Indonesia is plentiful and priced at 82-85% of LME nickel. Negotiate MHP supply agreements at 80% of LME or below, with volume flexibility as LFP adoption accelerates. For physical nickel procurement: the overall oversupply means spot purchases are safe — no urgency to lock long-term volumes.