How the US can secure a resilient electric vehicle battery supply chain
The rise of the electric vehicle (EV) could be a huge boon for the U.S. economy, workers, and the fight against climate change. But the American auto industry is hitting some speed bumps on the road to electrification. The COVID-19 pandemic, Russia’s war of aggression in Ukraine, as well as recent lockdowns in major cities in China have wrought havoc on global supply chains, creating restrictive bottlenecks and delays for U.S. manufacturers, making it harder to get newer, cleaner cars out of the factory and onto the road. But there is another, more existential threat to our EV supply chains on the horizon. The U.S. does not produce the battery minerals needed to power the future transportation system. In fact, we are over reliant on adversaries and complicated supply chains to do so. Overcoming this will require a focused, coordinated strategy between industry and the federal government.
There’s no question that America’s auto industry is transitioning away from gas-powered cars. Our two largest domestic manufacturers, General Motors and Ford, have committed to at least 40 percent EV sales share by 2030 and are investing tens of billions of dollars toward making that happen. Tesla, by far the largest and most renowned EV startup company, sold over 300,000 cars in the U.S. just last year. The EV market share increased to nearly 4.5 percent. Rivian is producing electric pickup trucks and more than five other EV startups are either close to launching production or breaking ground on new EV factories.
This monumental shift away from internal combustion engines will make us less dependent on foreign sources of oil and help protect American consumers from future spikes in the price of gasoline. But unless we build a domestic supply chain for these new vehicles, we risk trading one dependence for another — this time on adversaries like China and Russia for the critical materials and battery cell manufacturing capabilities we need to build EVs.
In the 1980s, the U.S. was the mineral capital of the world. Since then, China has developed a juggernaut battery supply chain industry. The industry is centered around chemical processing of battery materials, backed by substantial government funding and coordination. These subsidies led to a wave of outsourcing by American companies across industries from semiconductors to steel. In addition, China has spent the last two decades investing in the mining industry abroad, including major investments and mineral rights in Australia, Africa, Asia and South America. This has led to an overreliance on China — and in turn vulnerable supply chains and a lost economic opportunity at home.
Governments and companies have realized how hollow the domestic supply chains have become. Congressional leaders such as Sen. Joe Manchin (D-W.Va.) have pointed out that, as we transition to EVs, we risk becoming even more reliant on China and other adversaries who own much of the supply chain for EVs. Manchin is right to be concerned. But our dependency on China is not a forgone conclusion. It is not a reason to shy away from EVs. We have an opportunity to lean in, utilizing a resurgence in American manufacturing with innovation and a commitment to sustainability to drive action.
The Infrastructure Innovation and Jobs Act includes investments that will help us grow the domestic supply chain. This includes $7 billion allocated for critical mineral processing and battery manufacturing and recycling that will be matched by tens of billions in private sector investment. The Biden administration has also showcased its commitment to supporting American EV manufacturing and supply chains, including the president’s recent determination to support battery minerals development using the Defense Production Act authorities. On April 18, the Department of Energy’s Loan Programs Office also announced its first loan in over a decade supporting the EV supply chain by expanding a facility in Louisiana that processes graphite, a critical material used for battery anodes. More will be announced in the coming weeks and months.
These are critical steps forward, but building supply chains takes a long-term, sustained effort with strong policies and public-private coordination to meet climate and economic targets. To help spur action, we propose four key objectives to strengthen U.S. EV battery supply chains:
- Scale manufacturing of today’s technologies while continuing to invest in next generation battery technologies. We must prioritize U.S. manufacturing while pushing for lower cost and better performance.
- Commit to responsible mineral extraction, material processing and battery manufacturing. That means setting predictable and achievable standards and regulations that support development while protecting the environment.
- Partner with our allies, auto manufacturers and financial institutions to secure minerals from abroad. Increase coordination and project development with Canada, given their mineral deposits and our long-standing geographic, political and infrastructure connectivity. In addition, working with our allies in North America and the Pacific — South Korea, Japan and Australia — as well as in Europe will help us import minerals, equipment and know-how to scale our industry.
- Ensure federal, state, local and tribal governments are at the table with the private sector and the public from start to finish. These partnerships will help drive strategic, proactive investments and community engagement along the entire supply chain.
We are in an incredible period of transformation. Let us seize this moment in our history to build an EV supply chain, create economic opportunity for communities across the country, address greenhouse gas emissions reductions and power an electrification economy for a century or more.
Ellen Hughes-Cromwick, Ph.D., is a senior resident fellow for the Climate and Energy Program at Third Way, and the former chief economist for the Department of Commerce during the Obama administration.
Ben Steinberg is an executive vice president and co-chair of the critical infrastructure practice at Venn Strategies and leads the Battery Materials and Technology Coalition, as well as a former Department of Energy official from 2010 to 2018. Steinberg is a registered lobbyist.
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