The successful implementation of an aqueous‐based electrode manufacturing process for nickel‐rich cathode active materials is challenging due to their high water sensitivity. In this work, the surface of LiNi0.8Co0.15Al0.05O2 (NCA) was modified with a lithium phosphate coating to investigate its ability to protect the active material during electrode production. The results illustrate that the coating amount is crucial and a compromise has to be made between protection during electrode processing and sufficient electronic conductivity through the particle surface. Cells with water‐based electrodes containing NCA with an optimized amount of lithium phosphate had a slightly lower specific discharge capacity than cells with conventional N‐methyl‐2‐pyrrolidone‐based electrodes. Nonetheless, the cells with optimized water‐based electrodes could compete in terms of cycle life.