New tax credits to boost EV sales could stall out on lack of US battery supply

However, he adds, the deadlines are “very ambitious” and the bill “basically sets goals that people may not be able to achieve.”

Last week, E&E News reported that climate activists are already worried about whether automakers will be able to meet the new requirements.

Battery manufacturing is growing in the US and Europe, and major domestic automakers such as GM have recently announced investments to build massive new battery factories. But America has a lot of catching up to do.

About 80% of lithium-ion battery cells are made in China today. The country also dominates the supply chain for many of the materials used in batteries, including critical minerals, says Henry Sanderson, executive editor of Benchmark Minerals Intelligence.

Almost all the graphite used for battery electrodes comes from China and is processed there, Sanderson says. Lithium, although mainly mined in countries such as Australia and Chile, is also processed in China.

Nickel could also be hard to come by for automakers hoping to qualify for the credits, Sanderson says, since most of it is processed in Indonesia, which does not have a free trade agreement with the US.

Planning and building new mines can take more than seven years, which means that ore supply cannot change overnight. Recycling could come to supply a significant amount of battery materials, but it’s unlikely to sink in anytime soon, Sanderson says, since the number of end-of-life electric vehicles at this point can’t keep up. keeping up with the exponential increase in demand.

In any case, setting battery requirements tied to consumer tax credits won’t be enough to truly transform supply chains, Nahm says. Other support programs included in the new bill, such as tax credits for production and loans for the construction of new factories, will also be key.

Ambitious electric vehicle tax credits could play a role in building domestic battery manufacturing and encouraging new supply chains in the US. But whether those changes will come quickly enough to keep up with the surge in electric vehicle sales remains a very open question, which will likely determine how effective the new bill is at transforming the US vehicle fleet.

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