Q&A with Matt Fernley, Partner, RK Equity
CATL’s latest battery breakthroughs — a six‑minute fast‑charging LFP battery and a 1,500km‑range high‑nickel battery — have sparked intense debate over the future of battery chemistry.
Matt Fernley, partner at RK Equity and former editor of Battery Materials Review, explains what the announcements really mean for lithium demand, commodity markets, sodium‑ion technology, and supply chains. He also weighs in on USA Rare Earths’ Serra Verde deal and the outlook for critical minerals.
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Can you give us an introduction to yourself and your background?
I’m Matt Fernley. I’m a partner at RK Equity, formerly editor of Battery Materials Review, and head of research for an energy transition hedge fund. I’m a geologist and geochemist by training, and I spent the last 20 to 25 years as a sell-side and buy-side equities and commodities analyst.
CATL (HKG:3750) recently came out with news about new battery chemistries. What do you make of this announcement and the batteries that they’re bringing to market? How will this impact battery supply chains overall?
I think the first thing to say is that this has been slightly misreported in many areas, as one battery that can do this 1,500km range and recharges in six minutes. That’s not the case.
They’ve actually released a suite of batteries, one of which can recharge in six minutes and one of which can do 1,500km of range. But they’re not actually the same thing.
CATL is right out at the forefront in battery technology development. They and BYD, the other Chinese company, are far and away the most advanced in terms of a lot of the technologies that we see.
I think there are four key elements to take from this release: first of all, the fast-charging battery. That’s a lithium iron phosphate (LFP) chemistry. LFP has been gaining very substantial market share over the last two to three years, and I think it’s probably fair to say that LFP has knocked a lot of the mid-nickel and some of the high-nickel batteries out of the market, which has contributed to slightly lower-than-expected nickel demand growth from the battery industry over the last two to three years.
LFP continues to gain market share, and high-nickel batteries will have a niche in premium electric vehicles (EVs) and in some non-car applications of batteries, like military and defence applications. But it’s probably not going to be focused on the mass market.
Interestingly — and talking about premium applications — the other battery that was of interest in the CATL release is this 1,500km-range battery. They actually state in the release that it is a high-nickel battery. What’s interesting is that there are a number of Chinese cell manufacturers that have been pushing to maximise range on NPF batteries.
The fact that they’ve gone for this high-range product being an NMC battery seems to suggest that we’ve gone as high as we can in terms of energy density for LFP. And pushing for a 1,500km range makes the battery in the vehicle too weighty, too heavy, and that will impact the efficiency of the vehicle.
The fact that their high-range battery is an NMC battery says we’re probably close to the maximum in terms of energy density for LFP.
The other area that’s getting a lot of media coverage at the moment is the sodium-ion debate. We get a lot of people in the industry asking if sodium-ion is going to take over from LFP. Is it going to replace lithium-ion? For me, not in the near term. And the reason that I say that is twofold: First of all, sodium-ion is a number of years behind LFP in terms of energy density. And the second thing is that the supply chain is not well built out at the moment.
I think that sodium-ion is going to be helpful on the margins of the lithium-ion industry, but I don’t see it destroying demand for lithium-ion at this point in time. A lot of fuss is being made about it taking market share in the energy storage system (ESS) market, which has been one of the fastest-growing markets in batteries over the last six to 12 months or so. But those who are talking about it don’t seem to realise that because of the energy density drawbacks of sodium-ion, a sodium-ion cell would probably be 50 to 60% larger than a lithium-ion cell for the same energy power.
Realistically, it doesn’t seem that we will see ESS replacing LFP with sodium-ion. The only caveat for that would be if lithium prices go too high. So, if lithium prices spike as they did in the last cycle, then we could see demand destruction and a move into sodium-ion for the ESS space. But I don’t really see sodium-ion taking over in the EV space.
The final point — which a lot of commentators haven’t picked up on, which I think is very interesting — is this issue of battery swapping. I raise this because, obviously, when we talk about EVs and demand for batteries, we primarily talk about passenger vehicles. But one of the highest-growth areas over the last six to 12 months has actually been commercial vehicles.
One of the issues around commercial vehicles is because it takes so long to recharge a battery — or it has done historically — that using lithium-ion for commercial vehicles has been negated. But increasingly, with these new fast-charging technologies coming out, it becomes much more viable.
And one of the technologies that CATL is pushing is battery swapping, which we’ve heard about in passenger EVs, particularly with NIO, which is a Chinese maker that uses battery swapping. But CATL is bringing it forward in commercial EVs as well.
That’s relevant because you don’t have to worry about recharging these big batteries. In a commercial vehicle, these batteries are about 300 to 500 kilowatt-hours, which is about five to 10 times the size of a battery in a passenger EV.
These are big batteries, and they’re heavy batteries, and they require a lot of power — i.e., voltage to charge these batteries — which is difficult, unless you have a connection to the grid. So you could get around this by using battery swapping, and then you can replace the battery in five or 10 minutes, and then the vehicle can go on with whatever it’s got to do — whether that’s long-distance transport or whether that’s transportation on a route — and then coming back to a fixed point.
I think this battery swapping is very important because, if it takes off in a big way, it could mean that batteries in commercial vehicles take off in a big way.
You talked about the potential for lithium price spikes based on these changing chemistries. What are some other commodity-specific impacts that could potentially arise from changes in battery chemistry and changing ideas about what’s needed within EVs and ESS?
I hope that we don’t have any commodity price spikes. I think the industry is pretty happy with prices where they are compared to where they were last year. I think the industry is pretty happy with the fact that it’s making lots of money now.
It’s not really in the industry’s interest for prices to spike to the sort of levels that they did in the last cycle because that would result in a lot of demand destruction.
But we do have this environment at the moment where the significant acceleration in ESS demand cleared out cell inventories and lithium inventories in the system at the back end of last year. And we do have quite a lot of tightness, particularly in the raw material end of the spectrum in China at the moment. And if ESS demand remains strong over the rest of this year — and we have potentially a push on EV demand because of the high oil prices — that could go further towards tightening the market.
So, I’m pretty constructive on lithium prices over the course of the next year. I do worry about the potential for more supply to come through, which is what caught us out in the last cycle, when we’re all sitting very happy and pretty and saying that this was going to be a 10-year event.
It only took the Chinese two or three years to develop lepidolite and spodumene in Africa. So, I’m wondering what these Chinese-owned companies will have up their sleeves if lithium prices accelerate again.
I also think there is a fair amount of supply available from Africa that could come in. I’m wary about calling this a 10-year event, but certainly over the next 12 to 18 months, I’m pretty constructive.
I think prices are going to be cyclical. There’s going to be strong times and weak times within the market, but I would expect the general direction of travel to be upwards. And obviously, that’s a great result for lithium producers, but also lithium developers.
On the topic of security of supply, we’ve seen some major moves coming out of the US in the past year or so, with initiatives to ensure the supply of key critical minerals within the country and with allied countries. What are your thoughts on the recent news on USA Rare Earth (NASDAQ:USAR)?
It’s really interesting that the focus that we’ve seen so far from the US is very much focused on rare earths. It hasn’t really pushed out into other topics, but it’s very clear that the US realises that there’s an issue in rare earths.
In the summer of 2025, in the Northern Hemisphere, we saw MP Materials’ MP Materials (NYSE:MP) deal with the US government and the price floor. Then this last quarter, we saw the Japanese deal with Lynas Rare Earths (ASX:LYC) and the same price floor for neodymium and praseodymium (NdPr).
One of the things that came out very clearly was that even though the US was happy to do the deal with MP Materials, the ore body that MP operates doesn’t really have a lot of heavy rare earths. So, it’s not like Lynas’ Mt Weld, where there was a lot of heavy sitting around, but not stated in the resource statement until recently. There isn’t very much sitting around in Mountain Pass, from what we understand.
So this deal that USA Rare Earths has done to lock in the Serra Verde project in Brazil is really a landmark deal, and I think I wouldn’t be the only person who suggested that their asset that they have in the US isn’t maybe a tier-one asset, and the market value of the company is very high.
They’ve used their overvalued paper to buy what I do think is a tier-one asset in Brazil with strong heavy rare earth output. So I think it’s a great deal for them. I think a lot of people forget that USA Rare Earths also mopped up Less Common Metals, which is a rare earth refiner that has operated for many years and has a lot of intellectual property there. So, they genuinely are making an integrated rare earth producer, and with this asset and the LCM asset, that makes for a very interesting story going forward.
It’s been a busy 2026 so far with a lot happening within this space. Do you see this momentum continuing? Any thoughts on what we can expect next in the market?
I hope so. It’s been a couple of difficult years in the industry, and it’s always nice when stuff is happening. I am a little bit worried about the macro situation, particularly with the war in the Middle East and the high oil prices. I’ve never seen a situation where oil prices go this high and a consumer recession doesn’t follow.
So, for industrial commodities, I am a little bit wary. But I think lithium could buck that trend because of the higher oil prices and the demand for EVs. So, I have my fingers crossed on lithium.
In the rare earth space, it has been hugely undervalued for a number of years. And I think now with the government focus, the market is starting to follow.
And then there are a lot of niche critical materials around, which are very much leveraged to this — call it a supercycle, shall we — in high-tech areas which have never really been in focus before. I’m talking about things like antimony and tungsten, silica, and other materials which have never really come onto people’s radars.
These are going to be very, very important going forward. So, I think I’m a little bit wary about the outlook for base metals and industrial commodities, but I still think that there’s potential for significant momentum in more niche materials.
Write to Amy Rotman at Mining.com.au
Images: Mining.com.au
