“The historic shift to electric vehicles will give the U.S. a fresh chance to achieve energy independence, but it will require complex strategic moves that won’t pay off for years,” writes Joann Muller in a new piece for Axios.
A look at the numbers reveals that despite a noticeable push towards strengthening U.S. supply chains (we’ve featured some recent developments here) “there is still a gaping hole in America’s efforts” according to JB Straubel, a co-founder of Tesla who has moved on to head up Redwood Materials, a battery component company planning to invest more than $2 billion to start building battery components as early as this year.
Muller cites Jigar Shah, head of the Department of Energy’s Loan Program’s office, who says that the U.S. currently only possesses about 5% of the manufacturing capacity required to hit President Joe Biden’s ambitious declared goal of 50% of all vehicles sold in the U.S. being electric by 2030.
Simon Moores, CEO of Benchmark Mineral Intelligence and Morgan Bazilian, Director of the Payne Institute and Professor of Public Policy at Colorado School of Mines, dig deeper into the numbers in a recent piece on the Benchmark Mineral Intelligence Blog, pointing out that while in 2015, 40% of the cost of a lithium ion battery was raw materials, that percentage has shot up to 80% in 2022. Their conclusion: “[I]f EVs mean lithium ion batteries, EVs must now mean critical minerals and mining.” Industry leaders like Tesla’s Elon Musk are openly mulling throwing their hats into the mining ring – but, as Moores and Bazilian write:
“OEMs [original equipment manufacturers] are right to be fearful and hesitant to want to ‘become miners’.
Echoes of an ill-fated venture by Henry Ford to build rubber plantations in Brazil in the 1920s after the industry ran out of rubber tyres loom large. One hundred years on the industry faces an eerily similar problem.
The reality is that this global EV blueprint is yet to be built out to a scale needed to reach surging consumer demand and increasing aggressive OEM and government targets… We are nowhere close.”
Moores and Bazilian see the recent invocation of the Defense Production Act Title III by the Biden Administration to strengthen battery supply chains as a “major step forward” and “a move that it hopes will drag the finance community in to 21st century mining.” But as they conclude, the proof is in the pudding, and it goes back to a truly comprehensive “all-of-the-above” approach across the entire value chain that ARPN and others have been calling for. The Administration has been embracing partnership with allies, and expanding recycling and closed-loop solutions, but has been guarded at best when it comes to domestic mining. According to Moores and Bazilian, that must change:
“Big talk on EVs must now mean equally as big statements on mining. After all, a Gigafactory without secure raw materials is as useful to an OEM as a grain silo.”
As ARPN has said many times, the first word in supply chain…. is supply.
