Auto Makers Take a Stake in Critical Materials
Several countries are striking deals to avoid mineral duties to promote labor rights and circular production. As a result, the rise in electric vehicles will continue into the next couple of decades. According to KraneShares’ key takeaways from the BloombergBNEF Summit, “BNEF expects 14 million EVs to be sold in 2023. Moreover, commercial vehicles are expected to lead EV sales growth this year.”
Active Agreements in Electric Vehicle Minerals
Several countries, including the U.S., Indonesia, Japan and South Korea, are making agreements to promote better supply and production. For instance:
- The U.S. and Japan signed a trade deal that will not impose duties on critical materials but will raise the demand for electric vehicles through North American consumer tax credits. The U.S. is currently negotiating a similar deal with the E.U.
- POSCO Chemical will provide a near-term supply of CAM from its South Korean operations from 2023 to 2025. CAM is a critical battery material consisting of processed nickel, lithium, and other materials that comprise about 40% of the cost of a battery cell. Thus GM will be able to complete its goal of building 1 million electric vehicles in North America by the end of 2025.
- Ford is investing in an Indonesia-based nickel facility to secure more critical minerals needed to produce electric vehicle batteries. The facility will produce 120,000 tons of low-cost nickel a year to reduce the cost of EV batteries.
How Countries are Keeping Up With Supply Chain Demand
The U.S. has developed incentives like tax credits to secure the supply chain for EVs. For example, Reuters explains, “At least 40% of the value of critical minerals in the battery has to be extracted or processed in the United States or a country with a U.S. free trade agreement or recycled in North America.” At the same time, companies like GM are building factories closer to home in cities such as Quebec to strengthen the North American supply chain.
Securing EV Minerals for the Future
While the U.S. is behind its goal to expand the domestic lithium supply chain, these trade agreements with other countries are critical in keeping up with EV demand. President Joe Biden is still intent on bolstering the country’s manufacturing industry. To keep the United States on top of production, we must keep these deals in place to thwart China from being the leader in Electric Vehicle production.
Because domestic supplies don’t drive the U.S. battery market, the Department of Energy has teamed up with the Argonne National Laboratory to further the domestic lithium battery supply chain. While it won’t be an easy task–the U.S. and other countries are committed to sourcing minerals for EV batteries as ethically and economically as possible for the world.
At Pacific Component Xchange, we pride ourselves on offering quality components and news. In addition, we provide hassle-free quotes and a library of obsolete electronics that will exceed your expectations.