EV tax credit poses challenges for car manufacturing

A shift to US-based battery production is underway as big companies such as Tesla and GM ramp up domestic production capacity. US battery manufacturing capacity is expected to increase sixfold to 383 GWh by 2030, but the question is whether it will be fast enough to keep up with demand.

GM produces batteries at its plant in Rosetown, Ohio through Ultium, a joint venture with LG, and has invested more than $5 billion in other plants in Tennessee and Michigan. But it may need six or seven more power plants of that size to reach its goal of a fully electric vehicle by 2035.

For smaller start-up EV manufacturers such as Rivian and Lucid Motors, the challenge is even greater. We lack the resources for these huge investments and have to rely heavily on partnerships with our suppliers.

The bill’s requirements for critical materials are even more daunting to the EV industry. Again, China dominates the production of key materials such as lithium, cobalt and nickel. Together, the United States and Canada refine only 3 and 3.5 percent of the world’s lithium and cobalt, while China has 59 and 75 percent respectively.

Australia and Chile, two resource-rich countries with free trade agreements with the United States, can fill some of the slack. But domestic and foreign automakers also need to reinvigorate U.S. skills and resources that have suffered decades of underinvestment.

Demand for new domestic battery plants, steel plants and aluminum smelters leads to fierce competition among states trying to attract the jobs and tax revenues that these huge investments will bring. States like Nevada, Arizona, Washington and Michigan must prepare for a mining boom in mineral-rich states as automakers compete for domestic sources of the raw materials they need. .

It will be years before the full impact of these changes is seen, but now the first guns have been fired. Every player in the automotive industry, from the largest automakers to the smallest suppliers, must join or be left behind in EV Supply his chain strategy. Among the major automakers, GM and Tesla are already off to a head start with strong sales, domestic production capacity and investments in downstream materials integration. Suppliers need to understand how to capitalize on the coming wave of investment with the right technology and partners.

The switch to electric vehicles in recent years is progressing in stop-and-go traffic. A big new law out of Washington is flooring accelerators for both consumers and manufacturers.