energy insights

Domestic supply chain crucial for EV independence

When the race for world dominance of the electric vehicle (EV) supply chain began, it seemed like China was the only country that heard the starting gun.

Now, the rest of the world is scrambling to catch up and the stakes are high. China already enjoys a virtual corner on the market in battery manufacturing and they may be gaining an edge in EV manufacturing as well.

The popularity of electric vehicles is surging in China. With EV sales increasing, Chinese auto brands are now dominating China’s electric-vehicle market, claiming an 80% share in early 2021. Now, Chinese manufacturers are selling cars in foreign markets, such as western Europe, where nearly 24,000 Chinese EVs were sold in 2020.

While there is no doubt the United States is in the race, China appears to have drifted beyond reach.

Tesla may be the top electric vehicle maker, but China’s Contemporary Amperex Technology Co., Limited (CATL) leads the world in lithium-ion battery manufacturing and the company is still growing. In August, it announced a $9 billion capacity expansion project.

CATL is not the only Chinese company in the battery business, either. According to the global business data platform Statista, China accounts for 77% of the world’s lithium-ion battery production.

The U.S. may be running behind but we’re not sitting still. The Department of Energy expects domestic battery production capacity to grow dramatically over the next few years. In August, lithium-ion battery manufacturer KORE announced plans to build a new 1 million-square-foot manufacturing facility in Arizona, which will increase the company’s manufacturing capacity by 12 gigawatt hours of annual battery production.

The U.S. now produces only a fraction of the global lithium demand, but not because the nation lacks lithium reserves. In fact, U.S. lithium reserves rank fourth in the world at 6.8 million tons, according to the U.S. Geological Survey. Bolivia is No. 1, followed by Argentina and Chile.

Sustainability is an important consideration in the mining industry, which is why there is increasing interest in environmentally friendly projects that can extract lithium from brine found in regions such as Arkansas, California and Nevada.

Our Smackover Prospect in Southern Arkansas can be a key link in the domestic supply chain. At more than 100,000 acres and an estimated average lithium concentration of 325 parts per million, it is anticipated the lithium resource in our Smackover stake is sufficient to power tens of millions of EVs.

There is no doubt China had a head start in achieving dominance of the world’s EV supply chain, but the U.S. is out of the blocks with hundreds of millions in private and public investment now being spent on research, development and production infrastructure.

China may have already locked up its position at the top of the world’s EV supply chain, but American companies are poised to gain ground. Building a reliable domestic supply chain is a race we can win.

energy insights