Global demand for electric vehicles (EVs) is on the rise, and with it demand for EV batteries and the key minerals needed to produce them. China is the world’s fourth-largest producer of lithium — perhaps the most important EV component of all — and is far-and-away the #1 lithium processor, giving it a critical edge over the U.S. and its democratic, capitalist trading partners as EV production and sales ramp up. The Biden administration and Congress have been taking a number of steps to enable the U.S. and its compadres to reduce — with an aim to end — our dependence on Chinese batteries going forward. One recent move by the U.S. was to provide EV subsidies only to vehicles whose batteries and battery components come from the U.S., Canada or other countries we can depend on through thick and thin. But much more substantial advances need to be made to encourage lithium production if there’s to be any hope of securing a significant portion of the minerals expected to be required for an energy transition. In today’s RBN blog, we discuss these efforts and the challenges the U.S. and its friends face in becoming “EV-battery independent.”
The pace at which American drivers switch from internal combustion engine (ICE) cars, SUVs and pickups to EVs is much more than an idle curiosity to U.S. crude oil producers and refiners. If EV adoption is fast and furious, domestic demand for gasoline and diesel could begin to decline — but if EV adoption is slow and sluggish, the decline in motor fuel demand would be much more gradual. The proliferation of EVs would make Americans even more dependent on an electric grid that is increasingly under stress to meet today’s demand, never mind the extra demand from widespread EV charging. And despite the addition of a large number of wind farms and solar facilities in recent years, that grid is still powered primarily by fossil fuels (mostly natural gas and coal).
For these and other reasons, we’ve been monitoring developments in the EV space for some time now in stand-alone blogs like Electric Avenue and blog series like One Shining Moment, where (in Part 3) we discussed the gains in global EV sales in 2021 and 2022, the potentially market-moving government incentives for EVs in the recently enacted Inflation Reduction Act (IRA), and the slew of new U.S. battery-manufacturing plants announced by Honda, LG Energy Solution, Tesla, Panasonic, Toyota and Our Next Energy this year. We’ve also posted a four-part series, Tell It Like It Is, on the very serious challenges the U.S. and the rest of the world face in developing, producing and processing the astonishing volumes of minerals, metals and other materials that will be needed to make the energy transition a reality.
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