Shortage a US supply chain for tram Battery materials are often rotated as a story of inconvenient geography. In many ways, this is true. Got cobalt from Congo. Nickel Indonesia. Latin American lithium. But there is one important material that is not: graphite. The material, which is the largest component of the battery cell by weight, is not a rare metal. It’s an arrangement of six carbons that can be mined essentially anywhere in the world, including from large mines in the United States and Canada. And where it is not found naturally, it can be made synthetically, often from waste petroleum products. For long-life EV batteries, this approach is generally said to be the best.
And yet, of all the important materials that go into batteries, including those that are geographically restricted, the United States is perhaps the least equipped to produce its own EV-quality graphite. In fact, they are all made in China. Last year, when the federal government considered the exemption from tariffs on Chinese graphite products to expire, domestic car manufacturers (including Tesla) vehemently opposed. There’s nowhere else to get it — not for the US can not source their own material, but they simply didn’t invest in it.
Now, it’s no surprise that China leads the way in electric vehicles. The country dominates not only in terms of sales — half of last year’s total sales in China — but also in terms of manufacturing. Backed by aggressive government policies, Chinese investors have spent the past decade building the ability to extract raw materials, refine them, and assemble them into large batteries that power energy. for electric vehicles. They prepare to make money: Electric vehicle market is predicted to bring in $9 trillion between now and 2030, according to a recent metric report from the Bloomberg New Energy Finance research group, and just grew from there.
Now, American policymakers want action. The Inflation Reduction Act, which passed Congress last week and is likely to reach President Joe Biden’s desk in the coming days, includes new subsidies for American drivers looking to buy an electric vehicle. . It’s no longer with an old program limit the tax credit to 200,000 per automaker. But there are also new conditions. Earn full credits depending on the vehicle’s characteristics. Qualified vehicles must be manufactured in North America, and made, at least in part, from raw materials that are extracted and processed, then refined and assembled into batteries, in the United States. or in countries with which the United States is friendly. commercial relations. (In other words: not in China.) The bill is a far-reaching effort to build a US-led supply chain for the next generation of vehicles.
It will be very difficult. The details of the law are still subject to change before it is signed, and the Internal Revenue Service will ultimately determine which vehicles (and their supply chains) qualify for the credits. But the Alliance For Automotive Innovation, a trade group that represents most global automakers in Washington, said the current strict rules would eliminate 70% of electric vehicles currently on the US market. One analysis in a Congressional Budget Office bill that projects only 11,000 vehicles will receive full credit by 2023.
Some say that’s not such a bad thing. In an environment where supply is in short supply and many electric car buyers face tough waiting lists, proponents of the restrictions say the country no longer needs tools like tax credits to convince people to buy battery-powered cars . Instead, the subsidies are an ambitious attempt to change the way automakers build them. Along with investing in key materials manufacturers through Biden’s invoking the Defense Production Act, infrastructure bill last yearand last month’s bill for stimulate the domestic semiconductor industry, some hope that aggressive enough policies can bring the supply chain to a point where automakers and other battery consumers are willing to manufacture all of their products in the United States, or at least the US-friendly countries. Basically, the US is implementing industrial policy – in line with what China did many years earlier.
