Welcome to another edition of Inside Automotive with anchor Jim Fitzpatrick. Early this month, the Biden administration announced a $3.1 billion dollar plan to boost domestic battery production for electric vehicles. U.S. Secretary of Energy Jennifer Granholm had this to say about the announcement, “President Biden’s historic investment in battery production and recycling will give our domestic supply chain the jolt it needs to become more secure and less reliant on other nations.” Joining us today to discuss the development is Trent Mell, President and CEO of Electra Battery Materials.
President Biden’s $3.1 billion funding largely targets major electric car battery and cell manufacturers like LG Chem, SK Innovation, and others. The allocates some funding for electric car recycling as well. However, the plan heavily still focuses heavily on the bottom end of the supply chain, leaving little room for refining and mining, the upper end of the supply chain, Mell explains.
Ford CEO Jim Farley was recently quoted as saying that the lack of raw materials is what keeps him up at night. Mell adds that mining raw materials for electric car batteries is costly and labor-intensive, and is not yet reflected in President Biden’s plan. This will be a year of reckoning for the auto industry from Mell’s perspective. OEMs have partnered with their preferred electric car battery makers and now there is a race for raw materials. Auto companies might need to deploy their own capital to source materials domestically.
Lithium-ion phosphate batteries might hold the answer to increased raw material prices in the long run, says Mell. In current economic conditions, the cost advantage has eroded because prices have increased four times over. However, this is a temporary problem in the shadow of post-COVID supply chain and the War in Ukraine.
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