Since we published our insight in March 2026 on the growing interest in sodium-ion (Na-ion) battery technologies, mounting Na-ion product launches in the US and China, shortening mass-production timelines, and sustained lithium prices have contributed to growing bullish sentiment on this technology. Na-ion’s superior safety metrics over lithium-ion (Li-ion) chemistries and data centre fire criticality could be the catalyst for surging Na-ion demand.
Our analysis in March showed that Na-ion can only compete with incumbent lithium iron phosphate (LFP) technology on cell cost if lithium carbonate prices remain above $20 /kg for several years or reach $35 /kg in 2026. Our latest forecast shows that carbonate spot prices will sit above $20 /kg for most of 2026 before falling into the upper teens in 2027.
CRU’s battery cost data suggests little reason to bet on Na-ion. Nevertheless, China’s industry has spearheaded a surge in Na-ion battery energy storage system (BESS) announcements, seemingly against market fundamentals. In this update, we explore why Na-ion’s superior safety will underpin market adoption, how AI data centres could revert US localisation efforts, and the competing technologies that are already emerging.
Na-ion has superior safety metrics over LFP
Our March 2026 insight concluded that there will be few opportunities for Na-ion adoption, and it and will instead gain market share in sectors difficult to power with Li-ion batteries. This is largely due to Na-ion’s low energy density, which leads to higher system and manufacturing costs than Li-ion.
Na-ion cells achieve roughly 250 Wh/L on the cell level, compared with over 400 Wh/L for LFP. Therefore, Na-ion BESS require nearly double the cost of components like invertors and control electronics, as well as double the installation costs than LFP BESSs. This results in 20% higher Na-ion BESS costs than LFP in China in 2026.
However, despite higher system costs, the superior safety metrics of Na-ion could drive adoption in applications that have extremely low tolerance to fire risks and are agnostic to battery costs – particularly for BESS to support booming AI data centre demand. A 15-minute backup battery only accounts for 0.5% of the capex of a $10 M/MW data centre in the US. The AI boom could bring thriving booming demand for safe batteries, such as Na-ion.
Indeed, CATL signed two agreements – one with Hyperstrong to deliver 60 GWh of Na-ion cells over three years and one with Alfen to deploy 5 GWh of Na-ion systems across Europe.
Meanwhile, US-based firms Peak Energy, Alsym Energy and UNIGRID all plan to deploy Na-ion in the US market to provide rapid response storage systems to support the grid or safer batteries in houses, all with safety as a key metric. However, Na-ion’s supply chain is highly concentrated in China, which could raise concerns over technology security if adoption
Na-ion adoption could reverse US battery onshoring
Much effort has been made to de-risk US supply chains from China, primarily through retooling NMC cell production to LFP by the major Korean cellmakers LG Energy Solution, Samsung SDI and SK On. Together with the Chinese-Indonesian cathode producer LBM and Korean cathode producer L&F manufacturing LFP material outside China, they have constructed a feasible route to excluding Chinese geographic influence in a US-made LFP battery for BESS. Switching to Na-ion would mean starting from scratch.
The few Na-ion projects outside China are still years from production. Peak Energy partnering with General Motors is the only planned gigafactory in the US, which will not achieve mass-production until after 2028. LG and Samsung are still in the early stages of changing NMC production lines to Na-ion in South Korea. Doing the same in the US would add further costs and delays to their recent switch from NMC to LFP chemistry.
Meanwhile, the apparent prioritisation of Na-ion technology from China’s industry appears paradoxical, given higher system costs, lower performance and monumental overcapacity LFP cell and cathode supply.
However, China’s development of Na-ion technology is strategic. It enables a path to reduce reliance on lithium imports and production of domestic low-grade lepidolite resources, as well as make use of LFP overcapacity to supply markets that cannot be powered by Li-ion tech. Indeed, this is evidenced by China’s decision to exempt Na-ion tech from upcoming 2% consumer tax on batteries from September 2026.
China also realises foreign policymakers are interested in developing their own domestic Na-ion technology to reduce a reliance on China’s Li-ion supply chain. By leveraging the scale of its Li-ion industry, China will dominate the Na-ion industry, which will leave US developers almost certainly source Na-ion cathode material – and likely cells, too – from China.
Policy change is needed to drive Na-ion investments
The US has implemented mainly cost-related policies in a bid to reduce a reliance on China’s Li-ion battery supply. A combination of tax credits and import tariffs has improved the business case for an ex. China LFP value chain for mainstream applications.
However, Na-ion cells are not yet included in Section 301 tariffs worth 25%, meaning Chinese cells face the same duties as those from South Korea. Furthermore, CRU’s battery cost modelling shows imported Chinese Na-ion cell prices are only $15 /kWh more expensive than a locally made LFP cell in the US, assuming receipt of $35 /kWh tax credits which is passed on to customers. This equates to $87 /kWh at the system-level for a 20 ft BESS container, and an increase in capex of 0.2% for a 1 MW data centre in the US (subscribers of CRU’s Battery Technology and Cost Service receive access to cell costs and prices by region, chemistry and supply chain route).
As a result, we expect limited opportunity to invest in localised Na-ion supply chains without policy or corporate strategy prohibiting use of Chinese technology. This is unlikely if Na-ion has little impact on the US market, and we maintain expectations that LFP will continue to dominate the BESS market.
Even if Na-ion imports were restricted, there are alternative chemistries to Na-ion tech. New anode materials like Echion’s niobium titanate are one of the safest Li-ion technologies. Indeed, Echion has partnered with BAK Power to produce cells specifically for AI data centre applications. Novel technologies are also emerging, including zinc-ion, which uses non-flammable water-based electrolytes and more abundant materials than Na-ion.
The boom in data centre adoption will bring demand for safer batteries, and China will capitalise because of its headstart in the technology. To understand more about the battery technologies used in data centres and forecasted battery costs by supply chain route, please contact CRU's Battery Technology and Cost team.
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