Lithium iron phosphate batteries were once viewed largely as a lower-cost alternative for electric vehicles, but the chemistry is rapidly becoming a strategic industrial product. Vancouver-based Nano One Materials is positioning itself for that shift as demand grows across electric vehicles, stationary energy storage and defence applications.
The company is expanding production capabilities in Quebec while pushing a licensing model designed to establish LFP cathode production in multiple regions without requiring Nano One to finance every factory itself. That strategy arrives as governments in Canada, the United States and Europe seek more resilient battery supply chains and as China retains overwhelming control over global LFP cathode production. For Nano One, the opportunity is significant, but turning technological progress and government support into recurring commercial revenue remains the central test.
LFP Demand Is Expanding Far Beyond Entry-Level EVs
The commercial backdrop for Nano One has changed considerably as LFP has moved deeper into mainstream battery markets. The International Energy Agency says LFP accounted for more than half of global electric-car battery demand in 2025 and more than 90% of stationary battery-storage installations. LFP packs were also more than 40% cheaper on average than comparable nickel-manganese-cobalt packs. Those economics help explain why a chemistry once associated mainly with lower-cost Chinese EVs is finding a much broader customer base. Grid operators and data-centre developers, in particular, can prioritize cost, cycle life and safety over the maximum energy density needed for very long-range vehicles.
Nano One says LFP represented roughly 60% of total lithium-ion cell demand during 2025, equivalent to about one terawatt-hour, and estimates annual LFP demand outside China could reach 2.1 TWh by 2035. Those longer-term projections are inherently uncertain, but the direction is supported by industry trends. The IEA reported that worldwide battery demand grew more than 35% in 2025 and exceeded 1.5 TWh. For a cathode-technology company, that expansion matters because every additional gigawatt-hour of LFP cell production ultimately requires corresponding cathode material. Nano One is therefore trying to occupy the midstream portion of the supply chain rather than competing directly with battery-cell giants.
Nano One Is Betting on Licensing Instead of Owning Every Factory
The company’s strategy increasingly revolves around what it calls a “Design One Build Many” model. Rather than raising enough capital to build numerous large cathode plants on its own balance sheet, Nano One wants regional partners to license its One-Pot process and establish production through development companies, or “DevCos.” Those entities are intended to combine Nano One’s intellectual property and engineering knowledge with outside construction capital, customers and potential offtake agreements. In principle, the model could allow the Vancouver-based company to participate in several regional projects while avoiding the enormous capital requirements associated with becoming a vertically integrated battery-material manufacturer.
That distinction is important because battery factories can consume billions of dollars before reaching full production. Nano One instead aims to generate technology-licensing fees, royalties and engineering or support revenue as projects move from development through commissioning and operation. Its One-Pot process is designed to make cathode material directly from lithium and other metal inputs while eliminating several conventional intermediate steps and associated waste streams. The company says that simplified approach can lower capital requirements, energy use and environmental intensity. Those benefits still have to be demonstrated consistently at increasingly large commercial scales, but the completed engineering package developed with Worley Chemetics gives prospective licensees a more standardized starting point than a laboratory process alone would provide.
Candiac Is Becoming the Proof Point for Commercial Scale
Nano One’s most visible bridge between laboratory technology and industrial deployment is its Candiac, Quebec, facility. The site currently includes a pilot line capable of producing roughly 200 tonnes of LFP cathode material annually and is being expanded toward approximately 800 tonnes per year. By mid-July, detailed engineering for that expansion was 85% complete, according to the company’s second-quarter update. Commissioning of the enlarged demonstration line is targeted for the first half of 2027. The existing equipment is already being used for customer samples and qualification work, while the expanded system is intended to produce enough material for larger customer programs.
The Candiac project matters for more than simple tonnage. A potential licensee considering a 25,000-tonne-per-year commercial plant needs confidence that chemistry demonstrated in small batches can be repeated with industrial equipment, quality controls and commercially realistic operating procedures. Nano One says roughly 95% of the equipment by value for the expansion is sourced from Canada, the United States and Europe, including all equipment considered sensitive to its intellectual property. Federal support has helped move that work ahead. Natural Resources Canada lists a $9.31-million agreement supporting commercialization of the One-Pot LFP process, while separate federal funding supports alternative-feedstock research. That public backing reduces some development pressure, although customer adoption ultimately remains the commercial benchmark.
Defence Demand Is Turning Batteries Into a Security Issue
Defence demand adds a different dimension to the LFP opportunity. Military batteries must satisfy requirements that extend beyond price, including reliability, safety, supply assurance and the ability to obtain components from trusted jurisdictions. In September 2024, the U.S. Department of Defense awarded Nano One US$12.9 million through the Defense Production Act Investments program to increase and optimize LFP cathode-material production at Candiac and Burnaby. The Pentagon specifically highlighted LFP’s safety characteristics, cycle life and potential to source its inputs within North America. That award gave Nano One something many small battery developers lack: direct validation from a major defence procurement system.
Policy has continued moving toward supply-chain security since then. U.S. defence legislation restricts procurement involving batteries from specified Chinese companies, while Canada’s 2026 Defence Industrial Strategy emphasizes domestic and allied sources for strategically important materials and technologies. Ottawa has also committed substantial funding to dual-use innovation and supply-chain resilience. Nano One says it is discussing small-volume commercial supply with defence and energy-storage customers and is targeting initial agreements before the end of 2026. Those remain company targets rather than guaranteed contracts, but defence demand could offer an attractive early market because security of supply can matter as much as commodity-scale pricing.
China’s LFP Dominance Creates Both the Opportunity and the Challenge
The strongest argument for localized LFP production may be the extraordinary concentration of the existing supply chain. The IEA says production of LFP cathode material and key precursors remains overwhelmingly concentrated in China. Its 2026 analysis warns that efforts to build LFP cell factories in North America and Europe will not create genuinely diversified battery supply chains unless cathode materials and other upstream components are also produced outside China. That leaves western governments facing a difficult industrial problem: LFP has become one of the most economically attractive battery chemistries precisely while the manufacturing knowledge and capacity required to produce it remain highly concentrated geographically.
Nano One is trying to turn that vulnerability into a commercial opening. Its process can use different lithium and metal feedstocks and is designed to avoid dependence on some conventional precursor routes dominated by Chinese producers. The company and Worley have developed one plant configuration using suppliers from North America, Europe and South Africa, while a second configuration can incorporate lower-cost Chinese equipment where regulations permit it without using Chinese suppliers for intellectual-property-sensitive components. That flexibility acknowledges commercial reality. Western factories need resilient supply chains, but they must also compete with Chinese producers that have enormous scale, mature manufacturing ecosystems and some of the world’s lowest battery-material costs.
Feedstock Qualification Could Shorten the Road to New Plants
Technology licensing is only useful if future plants can secure battery-grade raw materials that consistently produce the required cathode performance. Nano One has therefore been qualifying feedstocks from multiple suppliers and jurisdictions before individual customers commit to major projects. In August, the company disclosed that it had produced LFP cathode material using lithium carbonate supplied by Standard Lithium’s South West Arkansas project and then manufactured battery test cells with that material. Initial testing produced a first-discharge performance of approximately 155 milliamp-hours per gram, according to Nano One. The company characterized the work as another step toward widening the sourcing choices available to future licensees.
That kind of pre-qualification can appear technical, but it addresses a practical bottleneck. Every new cathode producer normally has to establish that lithium, iron and phosphate inputs behave predictably in its manufacturing process, often followed by lengthy customer qualification. Nano One says completing some of that work in advance could shorten certain qualification programs by as much as a year, depending on customer requirements. Natural Resources Canada is supporting a separate Nano One program specifically aimed at optimizing LFP production with alternative feedstocks. If the company can build a library of qualified North American and allied inputs, future regional factories may be able to start development with fewer unresolved supply-chain questions.
Commercial Execution Remains the Measure That Matters
Nano One enters this expansion phase with meaningful government support but still faces the challenge common to many advanced-material companies: converting technical validation into sustainable revenue. At June 30, the company reported $19.3 million in cash, $17.6 million in working capital and $18.2 million in net assets. It said more than $63 million in non-dilutive capital had been secured since the beginning of 2024 through grants, loans and asset-related transactions, with approximately $20 million of government funding still undrawn as of August. That funding gives the company additional runway to complete demonstrations and customer work without relying exclusively on new equity.
The next milestones will therefore matter more than market forecasts alone. Candiac must move from expansion engineering to successful commissioning, prospective customers must complete qualification programs, and the DevCo concept must attract partners willing to finance substantially larger plants. Initial commercial agreements targeted for late 2026 would represent progress, but full-scale licensing projects would provide stronger evidence that Nano One’s technology can become a repeatable business model. The global shift toward LFP and the political push for non-Chinese battery supply chains create a favourable backdrop. The remaining question is whether Nano One can convert that structural demand into industrial deployments fast enough to establish itself before competing supply chains mature.
