energy insights

Chinese Supply Chain Haunts U.S. Electric Vehicle Industry

Giants within the U.S. auto industry have made tremendous strides in developing electric vehicle technology that will take us far into the 21st century, producing cars and trucks that compete in price and performance with their gas-powered counterparts.

Thousands of drivers are climbing on board the EV movement every year, enthusiastic about lowering carbon emissions and improving the environment. I’m sure, Henry Ford would have been proud to see this new wave of automation that is taking root a century after the first Model T rolled off his assembly line.

America has plenty to be proud of, but U.S. prowess in the EV industry only goes as far as the assembly line as most automakers look to China’s battery industry for help getting their cars from the factory floor to the lot outside.

That’s a critical concern, according to Securing America’s Future Energy (SAFE), a national advocate for the electrification of America’s transportation system. The U.S. government views China as a strategic threat to national security and the country’s economy. This presents a sticky situation for our EV industry, which depends heavily on China for its lithium-ion-battery materials.

“If China wanted to cut off supplies of processed materials for lithium-ion batteries, as it did with rare-earth materials to Japan in 2010, it would create a dire situation,” Abigail Wulf, director of the Center for Critical Minerals Strategy at SAFE, told WardsAuto. “It would affect us like the chip shortage is affecting us now. It wouldn’t be immediate pain but going forward, the situation could become dire.”

China imports much of the world’s cobalt, nickel and lithium, then processes the metals for EV battery manufacturers around the world. The country controls the processing of nearly 60% of the world’s lithium, 35% of the nickel and 65% of the cobalt. Meanwhile, the U.S. imports most of the metals that are required for EV-battery manufacturing, she said.

With increasing demand for electric vehicles and batteries, Wulf says the U.S. might not have sufficient raw material supplies to meet that demand.

“We are definitely behind in this race,” she said. “We’re in a very precarious situation because we’re so dependent on Asian processors for these materials. And if they wanted to cut off supplies, they could.”

Wulf says it is not too late for the U.S. to close the gap, but it will take increased investment in U.S. battery component production to build the type of supply chain that can support the country’s burgeoning EV manufacturing industry.

A stable, domestic supply chain is vital for American EV makers and would be a huge step toward self-reliant manufacturing. That would give Henry Ford even more to smile about. Why? If anything, Henry would have been happy to see U.S. cars dominating the world.