The auto industry’s quickening shift to electric cars is spurring investment in another emerging industry in the U.S.: manufacturing lithium-ion batteries for those vehicles, reports The Wall Street Journal (Jan, 27, 2021). China currently dominates the market for producing electric-vehicle batteries. But as auto makers spend billions to build more plug-in models in the U.S., several companies are looking to expand the supply chain for batteries and related materials in North America—a region that has long relied on imported components.
The U.S. needs to reduce its reliance on China if it wants to lower costs and remain competitive in making EVs and their batteries domestically. U.S. battery-making capacity is expected to increase sharply over the next decade, rising more than sixfold from 60 gigawatt hours of annualized production in 2020 to about 383 gigawatt hours in 2030.
Battery-manufacturing giants such as South Korea’s LG Chem and SK Innovation are building big factories in the U.S. to expand American production of electric-car batteries. LG Chem is building its factory in Ohio as part of a joint venture with GM. Tesla is also expanding its battery-making capabilities, seeking to cut costs and shorten its supply chain by making some materials in-house. N. American firms Sila Nanotechnologies, Romeo Power, and Lithium Americas are planning U.S. factories as well.
China makes more than 70% of the world’s lithium-ion batteries. It also refines and manufactures the majority of minerals and materials needed for those batteries. Moving more battery production to the U.S. will help car companies and their suppliers bring down costs, a step that is important for consumers to adopt EVs more widely.
Classroom discussion questions:
- What are the critical components of these batteries, and does the U.S. have a supply of them?
- What is the danger of opening a large number of battery manufacturers?