Search for local EV battery materials is on amid U.S.-China trade tensions

TRAVERSE CITY, Mich. — Companies are scrambling to secure regional sources of critical materials for electric vehicle batteries as the EV supply chain in the U.S. grows in the coming years, executives said at the 2024 CAR Management Briefing Seminars here.

According to data from the Department of Energy, about $120 billion has been planned for facilities related to EV battery manufacturing in the U.S. since 2021, including announcements for more than 400 new or expanded minerals processing, materials processing and manufacturing facilities.

The U.S. is on track to have 1,400 gigawatt-hours of battery capacity by 2030, enough to supply 14 million to 18 million EVs annually, according to the department.

But the industry remains heavily dependent on China for sourcing raw or processed EV battery materials, a concern highlighted by many executives at the event. The industry hopes to build a robust North American supply chain amid heightened trade tensions between the U.S. and China and as the federal government incentivizes companies to set up shop locally.

Bob Lee, LG Energy Solution's North American chief, said the EV battery manufacturer is working with suppliers to procure components and materials from outside China as it expands its operations in the U.S. Doing so would add greater stability to the company's supply chain, he said.

"I do think it's going to take time," he said. "It's not something you can bring online right away."

Indeed, a mine for critical minerals can take more than a decade to come online from the time it is announced, said Sarah Colbourn, acting head of sustainability at data provider Benchmark Mineral Intelligence.

The industry could face a "great raw materials disconnect" between demand for such materials and their availability by the end of the decade, Colbourn said. She singled out lithium as a material that could be particularly constrained.

"It's not as simple as just making batteries," she said. "We have to scale up the entire value chain."

Building out capacity is just one part of making the U.S. more competitive.

Producers of critical materials such as nickel and cobalt will also need to contend with Chinese companies that can better weather potentially volatile pricing swings than U.S. ones because of their generally lower costs and lower environmental standards, said Kristin Hengstebeck, director of business development and market research at Canadian deep-sea minerals explorer The Metals Co.

"There's some political intervention that's been somewhat helpful, but until you're able to weather commodity price like Chinese operations are, you just can't be competitive," Hengstebeck said.

Recycling will eventually play a significant role in helping companies obtain locally sourced materials and to keep costs in order, said Allan Swan, president of Panasonic Energy of North America. As an example, he pointed to Panasonic's partnership with battery recycler Redwood Materials Inc. to provide it with recycled cathode materials.

"We believe that's an important play, not only for sustainability but for the way forward," Swan said.