The Biden administration wants to reduce U.S. reliance on China when it comes to electric vehicle production, but it's running into a problem: Some critical raw materials are only found abroad, and China controls much of the supply.
Workers at a nickel electrolysis workshop on Dec. 30, 2022, in Jinchang, China. Photo: Li Yalong/China News Service/VCG via Getty Imagesraw materials are only found abroad, and China controls much of the supply.The provenance of raw materials used in electric vehicle production — including lithium, nickel, cobalt and graphite — is about to have a huge impact on tax credits designed to put such cars within reach of average Americans.
New rules issued under last year's Inflation Reduction Act exclude EVs with components from "foreign entities of concern" — a category that remains hazy but will likely include China, given that federal officials recently tagged it as such in the semiconductor world. The idea is to reduce U.S. reliance on China, a lofty goal given that country's control of vital battery resources and technology.Many of the minerals essential to EV battery chemistries are primarily mined and processed in China, or by companies within China's sphere of influence.It's also home to one of the world's largest natural battery graphite resources, and is the only country currently mining such material in large quantities.
While lithium and some other battery minerals exist in the U.S., developing mines is an expensive, time-consuming process.Navigating such geopolitics while trying to master rapidly evolving technology can be dicey for automakers, who are lining up forFord Motor, for example, expects more than $7 billion in battery manufacturing tax credits between now and 2026, and says the annual credits will leap much higher starting in 2027.
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