U.S. must build EV batteries and advanced technologies at home
In August, Congress passed the Inflation Reduction Act, making a historic investment to rebuild industries that the U.S. invented but allowed China and other nations to capture. The legislation includes important production tax credits for critical mineral producers and refiners as well as manufacturers. But more is needed, including permitting reform, to gain energy independence from hostile nations such as China.
Credit Suisse estimates that the legislation’s tax incentives — combined with ensuing private capital investments — may total $1.7 trillion over the next 10 years. Having kicked off this green gold rush, it behooves us to now think about protecting these investments.
A particular threat is China’s domination of the world’s mineral supply chains, thanks to Beijing’s massive subsidies and predatory trade behavior. World Trade Organization rules have proved fruitless in dissuading Beijing from using its alarming grip on raw materials as a source of geopolitical leverage.
This will undoubtedly affect America’s electric vehicle (EV) ambitions. The building blocks for EVs are still largely imported — even as demand for key battery metals is exploding. It’s predicted that by 2040, the demand for EV inputs of lithium, nickel, graphite and cobalt could increase by a staggering 30 times. Unfortunately, China has already established a stranglehold on these resources, since Beijing controls 70% of the world’s lithium supplies and almost all of the world’s graphite. Especially concerning is China’s control of cobalt mines in the Democratic Republic of Congo that use child labor.