The auto industry’s shift to electric vehicles (EVs) has companies and the U.S. government racing to create a supply chain for batteries in North America.
American EV manufacturers have not typically produced their own batteries, instead relying on foreign countries like Australia, China, Congo, and Indonesia to produce the raw materials. They are then assembled mostly in China, according to The Wall Street Journal (WSJ).
Batteries represent one-third of the cost of an EV, the most expensive component of the car. The United States recently passed the Inflation Reduction Act, which includes incentives for batteries built in North America. It also penalizes auto manufacturers that source their batteries abroad.
The new legislature could add an additional $100 billion to the American EV battery market, according to Automotive news.
Last year, President Biden awarded $2.8 billion in grants for projects to 20 companies in at least 12 states to help increase domestic manufacturing of batteries for EVs, according to CNBC. The funding was included in the $1 trillion infrastructure package that passed in 2021.
This money is set to go to projects that process lithium, graphite, and other battery materials, manufacture components and develop new approaches like producing parts from recycled materials, according to the WSJ.
The goal is to lower the U.S. battery manufacturers’ dependence on foreign countries to produce EV batteries. The projects should develop enough lithium to supply two million EVs per year, enough nickel to supply 400,000 EVs per year, and graphite to supply 1.2 million EVs per year, according to the Energy Department.
Under the current process, the assembly of batteries that are in electric vehicles is just one part of a lengthy process that involves many companies and countries to create the final product.
The key elements that make up a lithium-ion battery, the type of battery found in most EVs, are the anode, cathode, separator, electrolyte, and lithium ions, according to Green Cars. The most critical component is lithium, for which demand is at an all-time high.
Car manufacturers are now forming joint ventures with battery producers to capitalize on the federal incentives and control their supply chains, the WSJ said.
Over a dozen battery factories are expected to be built in the U.S. over the next five years, mostly located in the Midwest and the South, in a region dubbed ‘The Battery Belt.’ This new region will reshape America’s heartland, according to Axios. Still, these plants would source raw materials from abroad.
“Producing advanced batteries and components here at home will accelerate the transition away from fossil fuels to meet the strong demand for electric vehicles, creating more good-paying jobs across the country,” said Energy Secretary Jennifer Granholm.