The Electric Vehicle Revolution

Dare I say, it is barely possible to find accurate information about the current competition between America and China.

When someone like David Goldman offers up some sane and sensible analysis in the Asia Times, analysis that shows us falling behind in some very serious ways,  someone is going to start shrieking that he must be on the payroll of the Chinese Communist Party.

Thinking like that will doom us. 

Now, I have no expertise whatever in electric battery production. Yet, Steve Levine does, so I will defer to his expertise, as he explained in the New York Times. At the least, it is fact based.

The problem is, we are so far behind in the race to develop batteries for electric vehicles that it will take years to recover our deficit. And yet, if you read the press you will imagine that we need but build a new plant here and there, and presto changeo, we will catch up. It’s called whistling past the graveyard. 

Levine explains:

We now stand at the precipice of the age of batteries and electric vehicles, technologies likely to steamroll fossil-fuel companies and petro states. From a few thousand fully electric cars sold around the world in the late aughts, consumers are on track to buy four million of them this year.

Guess what, team. When we produce batteries and vehicles, we are dependent on the Chinese supply chain. Oh.

So far, the United States appears to be little more than a spectator to this revolution. While its battery and automakers are poised to produce cutting-edge batteries and popular electric vehicles, they will rely almost entirely on a supply chain controlled by China. Over the past decade, China has built up most of the world’s capacity to process the metals that make lithium-ion batteries — the heart of the electric vehicle revolution — work. It is this capacity that puts China in the catbird seat in the race for the future while America falls farther and farther behind.

The race began in 2008. While the Chinese set about to amass a supply of the raw materials needed to produce batteries, the Obama administration indulged in silly industrial policy, funding companies like solar panel maker, Solyndra-- the better to save the planet from fossil fuels:

Following the financial crash of 2008, the United States and China, along with Japan, South Korea and other countries, began an undeclared race to create and reap the dividends of the E.V. industry, including associated businesses such as battery production. This led the United States and China to inject stout public funding into battery and E.V. start-ups and established companies, in hopes of kick-starting an economic recovery.

In the United States, initially buoyant public and political support for President Barack Obama’s strategy eroded within just a couple of years, following accusations of squandered public funds in a government-backed loan to Solyndra, a California solar panel company that fell victim to cheap Chinese imports.

In China, by contrast, state-backed companies have secured a reliable supply of the raw metals and elements behind E.V. batteries. In the last three and a half years alone, Chinese companies have been the biggest international buyers of additional lithium assets amid soaring prices for the metal.

How bad is it?

By 2018, Chinese companies also owned half of the largest cobalt mines in the Democratic Republic of Congo, the source of most of the world’s supply of the metal. Government funding for China’s electric vehicle sector during the past decade amounted to more than $100 billion, according to a study by the Center for Strategic and International Studies.

Even more important, China supported companies that would process these materials into the electrodes that go into battery cells. This is the more crucial part of the battery supply chain: After the labor-intensive, often dirty extracting of the metals comes the refining of nickel, cobalt and manganese into sulfates, then into precursors used to produce the cathodes that go into battery cells.

We are whining about the weather. China is building a global battery supply chain to produce batteries:

China’s decision a decade ago to knit all the pieces of its battery supply chain together into a comprehensively controlled, globe-spanning industry has yielded it genuine strategic power. Turning ore into electrodes is far trickier than extracting minerals. It has taken China much of the decade to stand up an industry that, according to Wood Mackenzie, an energy research and consulting firm, now possesses about 90 percent of global capacity to process raw lithium, about 70 percent of cobalt and 40 percent of nickel. China also has almost all the manganese- and graphite-refining capacity.

But, can we catch up?

Can the United States hope to ever catch up? In recent months, General Motors, Stellantis and Toyota have each announced plans to build massive battery factories in North America. Ford said it and its South Korean partner will build three U.S. battery plants by 2025 with enough capacity to equip one million E.V.s a year. But no one seems to know exactly how the battery supply chain will come together and where they will obtain each of the necessary precursors, like cobalt and manganese.

The Biden administration sees that there is a problem, but seems incapable of dealing with it. Perhaps they should send Kamala Harris around the world to make a complete fool of herself. The Biden plan does not fund battery production-- a significant failing:

In fact, the Biden administration, which released its National Blueprint for Lithium Batteries in June, signaled a readiness to allocate $174 billion to encourage Americans to buy electric cars and trucks. But only around $7 billion for the supply chain for batteries made it into the $1.2 trillion infrastructure bill passed by Congress last week, small bore for a battery-metals processing industry that will require tens of billions of dollars to stand up.

Now that we are stoking a new Cold War with China, it is useful to keep in mind that the Middle Kingdom can shut down battery production by closing off the supply chain:

With so much uncertainty, it seems likely that for the 2020s and well into the 2030s the United States will remain reliant on Chinese supplies. Will China keep the supply lines open to America? Perhaps it will. But we don’t know.

So for the United States, the best hope is to get a grip on its own supply chain. “If we want a 100 percent reliable battery supply chain here in the U.S.,” Bob Galyen, a battery consultant and former chief technology officer for Contemporary Amperex Technology, a Chinese battery company, told me, “it’s going to take us a decade to do it.”

If you would like to feel optimistic, consider that it’s only going to take us a decade to catch up. And that assumes that China sits back and allow us to do so.