[Battery production is key to building a green-energy workforce, but without more government support, the United States may miss out.]
China dominates battery production today, with 93 “gigafactories”
that manufacture lithium-ion battery cells, vs. only four in the United States,
according to Benchmark
Mineral Intelligence, a prominent data provider. If current trends
continue, China is projected to have 140 gigafactories by 2030, while Europe
will have 17 and the United States, just 10.
That would leave the United States dependent on China and other
trading partners for much of its battery supply, a risky proposition not just
for the auto industry but for the military, which is planning
to electrify more of its vehicles and gear. It would also mean missing out on
much of the jobs boom the sector is expected to bring.
“This could be a game changer when it comes to jobs, but we have
to find a way to ensure we keep the technology in the U.S. and incentivize
companies to produce it in the U.S.,” said Venkat Srinivasan, a top battery
expert at Argonne National
Laboratory in Lemont, Ill.
That will happen, say U.S. companies and clean-energy supporters,
only if the federal government helps coordinate and finance an aggressive push
to boost domestic manufacturing of batteries and their raw materials, as
governments in China, Korea and Europe are doing.
“We’re naive to pretend this will happen without government
dynamism and action,” says Danny Kennedy, CEO of New Energy Nexus, a
nonprofit in Oakland, Calif., that funds and advises start-ups.
[The
next China trade battle could be over electric cars]
The calls are part of a renewed embrace of industrial policy to help the United States
keep its technological edge in an increasingly competitive global economy.
Backers of federal action say that without it, the United States risks losing
out on another major technology boom — as it did with solar panels and 5G mobile network equipment.
Thanks to its federally funded universities and national labs, the
United States has some of the best early-stage battery research in the world.
It also has Tesla, an electric-car leader with big plans for domestic battery
production. But other countries are doing far more to support their battery industries
and ensure that production jobs stay local.
China is bolstering its battery and electric-vehicle companies
with tens
of billions of dollars of state support, including research and development funding,
subsidies for manufacturers and financing for battery-charging stations. It has
also driven demand by subsidizing consumer purchases of electric vehicles, and
by making buyers of gasoline-fueled cars wait much longer for a license plate.
The European Union is also closely involved in supporting its
battery sector, having established a European Battery Alliance in 2017 that set sweeping
goals for manufacturing, charging infrastructure and electric-car uptake.
Germany is
requiring all gas stations to offer electric-car charging. And last
month, the European Commission said it would spend
$3.5 billion to subsidize Tesla, BMW and other companies to produce
more batteries in Europe and help cut imports from China.
Under the Obama administration, the United States offered federal
loan guarantees to support clean-energy companies including Tesla, which is now
one of the world’s most valuable auto companies. It also introduced a $7,500
tax credit for electric-car purchases, but the perk was limited to 200,000 cars
per manufacturer, which Tesla and GM have already
exhausted.
Some of this federal support dried up during the Trump
administration, under withering criticism from conservatives, who dismissed
clean energy as a liberal priority.
Aside from California, which has adopted many incentives and
regulations to boost electric vehicles and renewable energy, the United States
has largely left the sector to the free market.
[California
to phase out sales of new gas-powered cars by 2035]
President Biden has said he will “use all the
levers of the federal government, from purchasing power, R&D, tax, trade,
and investment policies” to “position America to be the global leader in the
manufacture of electric vehicles and their input materials.”
He took a first step by signing
an executive order calling on government agencies, including the U.S.
Postal Service, to start converting their fleets to electric vehicles. He’s
also pledged to build 500,000 charging stations, revise and extend tax credits
for buyers and tighten fuel economy standards for gas-powered vehicles, which
the Trump administration relaxed.
And his Cabinet members and nominees have stressed the need to act quickly to create clean-energy jobs.
“We’d better believe China is in
this game. They are competing aggressively,” former Michigan governor Jennifer
Granholm, Biden’s nominee for energy secretary, told a Senate hearing on Jan. 27. “Without a federal
partner to make sure we can get these jobs in America then we will be losing
globally.”
In a meeting with senators Thursday
to discuss infrastructure investment, Biden warned about the need to compete
more effectively with China. “If we don’t get moving, they’re going to eat our
lunch,” he said. Also Thursday, the Department of Energy announced up to $100 million of
new funding for clean-energy research.
Republicans have long expressed
skepticism about government involvement in the economy and heaped criticism on the Obama administration when a
solar-panel company failed after receiving a federal loan guarantee. But
some have started to support more government intervention as
necessary for competing with China.
[To
counter China, some Republicans are abandoning free-market orthodoxy]
Doug Campbell, co-founder of
battery start-up Solid
Power in Louisville, Colo., said the United States should boost tax
breaks and other financial support for companies building manufacturing plants.
“One thing we do great here is
innovate,” said Campbell, whose company was spun out of the University of
Colorado. “But where there is a chasm is when it gets to manufacturing scale.
That is where other nations step in and provide some of that capital before a
bank is willing to lean in.”
He added, “We can choose to step in
and entice industry and growth, or we cannot and run the risk that we are
ceding all of this overseas.” Solid Power so far has established a limited
manufacturing line to produce thousands of cells a year, which automakers
including Ford and BMW are testing.
Lithium-ion batteries grew out of
research that won the 2019 Nobel Prize in chemistry. The powerful, rechargeable
batteries first appeared in Sony camcorders in the early 1990s and are now used
in everything from smartphones and laptops to electric vehicles.
They are also crucial for
harnessing renewable energy, allowing power companies to store solar- and
wind-energy for use when the sun goes down and the wind stops blowing. Cars,
buses and power companies use large battery packs containing thousands of
individual battery cells.
The Pentagon is “very interested in
electrifying” as a means to lower its fuel costs, said Sam Jaffe, a battery
expert at Cairn Energy
Research Advisors in Boulder, Colo. Drones and other electronic gear
are already battery powered, and in the future ships and aircraft may be, too,
he said.
That heightens the need for strong
domestic production, said William Acker, executive director of NY-BEST, a nonprofit promoting
the battery sector in New York.
“If all of our batteries are coming
from Asia and you need them to conduct military operations, that’s a very
concerning situation,” Acker said.
[Tesla’s
latest big unveiling isn’t a car or truck: It’s the battery tech that could
power its future]
Tesla and its Japanese partner,
Panasonic, manufacture lithium-ion battery cells at a giant factory in Nevada.
At Tesla’s “Battery Day” presentation in September, CEO Elon Musk
said the company was preparing to build a new battery-cell factory that would
dramatically increase output and cut costs.
Musk didn’t say where the plant
would be located, but in January Tesla
tweeted job postings for battery production at Giga Texas, the new
auto factory Tesla is building near Austin.
Musk also said Tesla would begin
extracting lithium from a deposit in Nevada to supply the new battery factory.
He said the mining would involve using salt to extract lithium from heaps of
dirt, and then returning the dirt to its original place, a process he called
“environmentally friendly.”
Tesla’s goal is to exert control over the whole battery supply
chain, from base battery materials to the building of battery cells, to their
installation directly into Tesla’s cars, Musk and other Tesla executives said
at Battery Day.
General Motors and its partner,
South Korea’s LG Chem, began building a battery-cell plant in Lordstown,
Ohio, last summer that will eventually create 1,100 jobs. The factory is part
of GM’s big push to stop selling gas-powered cars and
switch to electric by 2035, which the automaker promoted with a
Super Bowl ad starring Will Ferrell.
The Chinese company Envision Group gained
control of a lithium-ion battery plant in Smyrna, Tenn., after acquiring the battery business of Japan’s Nissan
in 2019. The factory makes batteries for a nearby Nissan Leaf plant.
And South Korea’s SK Innovation
is building two lithium-ion battery factories in
Commerce, Ga.
To maximize job creation and to
ensure the United States has a secure supply of batteries, it needs to develop
the industries that mine and refine the materials needed for production,
including lithium, says Kennedy, the head of New Energy Nexus.
At the moment, China dominates much of the trade of these materials.
The United Nations warned in a report last year that some battery-related
mining has caused environmental damage. Much of the world’s current lithium
supply comes from Latin America, where some mining has caused groundwater
depletion, soil contamination and other forms of environmental degradation, the
report said.
The U.N. called the global boom in
electric vehicles “great news” for reducing greenhouse gas emissions, but said
industry should invest in greener mining techniques and better ways to recycle
materials from spent batteries.
Kennedy and others point to a
fledgling project in Southern California called Lithium Valley, which seeks to extract the mineral from the
Salton Sea.
Supporters of the project say the
lithium could be extracted in an environmentally friendly manner, as a
byproduct of geothermal energy production already underway in the area. The
California Energy Commission has expressed interest in the idea, and has given grants for further study of the project.
California also set up a commission to study the environmental impact.
California is the largest market in
the United States for electric vehicles and energy-storage batteries for power
grids, “and now we’d like to do more manufacturing of the intermediate steps,”
David Hochschild, chair of the California Energy Commission, said in an
interview. “We have the end use of electric vehicles and energy storage, and we
have the raw materials, so the vision of Lithium Valley is to get the full
supply chain.”
Europe is also pursuing development of its own lithium mines, to
reduce its reliance on imports.