The US and Europe can cut their dependence on China for electric vehicle batteries through more than $160bn in new capital expenditure by 2030, Goldman Sachs has forecast. EV batteries are one of the core technologies giving rise to concern across western capitals over dependence on China.
Following years of deep state support and a desire by Beijing to cut its own reliance on oil imports, China produces three quarters of the world’s batteries and also dominates production of their materials and components. However, according to a report to clients, seen by the Financial Times, the investment bank’s analysts believe a stark pivot to protectionism in Washington and Brussels, combined with an unprecedented spending spree by non-Chinese companies, have the potential to extricate the west from its reliance on Beijing over the next seven years.
To obtain a self-sufficient supply chain, countries competing with China would need to spend $78.2bn for batteries, $60.4bn in components and $13.5bn in mining of lithium, nickel and cobalt, as well as $12.1bn in refining of those materials, the report calculated. The bank’s analysts believe demand for finished batteries could be met without China within the next three to five years, largely thanks to big investments in the US by South Korean conglomerates LG and SK, who have been attracted by massive subsidies from US taxpayers. LG Chem said on Tuesday it would invest more than $3bn to build a battery cathode factory in Tennessee, the biggest of its kind in the US. Goldman forecasts that the market share of the Korean battery makers in the US will soar to around 55 per cent in three years, from 11 per cent in 2021.
The passage of the Inflation Reduction Act in August means huge tax benefits and other subsidies for localising battery supply chains and fuelling the uptake of EVs. Goldman expects the “average eligible EV in the US” will receive more than $10,000 in benefits from the IRA.
Read more at: https://www.ft.com/content/458ebaf3-c1ee-499c-b7f3-2e5d7f1bb6df