Unlike the original automotive sector that grew organically over a century into what it is today, the electric vehicle (“EV”) market is expected to hit the ground running and achieve mass-market penetration in only a few decades. Electric vehicles run on rechargeable lithium-ion battery packs rather than internal combustion engines, and produce zero carbon emissions. However, their batteries are made using rare metals such as lithium, and presently, the United States barely has a supply chain that can provide these metals, with American EV makers and established automakers sourcing the metals from foreign supply chains.
China, which is America’s largest competitor on the global stage, is one of the largest processors of EV metals in the world, a that fact doesn’t sit well with the White House. According to a statement released by the White House in early June, the U.S. must reduce and ultimately cut its reliance on Chinese supply chains by working with its allies to secure EV battery materials. Additionally, the country should process these raw materials domestically to ensure the process does not have environmental impacts that could potentially cancel out any progress made by switching to alternative fuel vehicles.
To achieve this, the government will have to provide funding to help expand international investments and beef up supply chains for EV battery materials with allied countries. These funds, which will be provided via the U.S. Department Finance Corporation, will also be used to beef up the supply of these rare metals by recycling EV batteries that have reached the end of their lives. Such batteries pose a major environmental concern as they contain hazardous materials that cannot be successfully recycled using current recycling methods.
Refining battery recycling techniques would allow these metals to be fed back into the supply chain. On top of that, it would keep them from ending up in landfills where they would pollute the environment for years. A 250-page document from the White House recommends securing minerals from allies such as Canada, Finland, Australia and Chile; the last two countries contain the largest lithium reserves in the world. The Biden administration will also launch a group of experts to study and determine how and where EV battery metals, as well as other relevant technologies, can be produced and processed in the country.
Concerning the environmental concerns of mining these metals, the Department of the Interior coupled with other agencies will identify gaps in mining laws to ensure local production will not harm the environment or adjacent communities. Through its Advanced Technology Vehicles Manufacturing Loan Program, the Energy Department will provide $17 billion to help fund those efforts.
As the federal government works to make battery materials locally available, private entities such as Ideanomics Inc. (NASDAQ: IDEX) are bringing innovative products on the market, including wireless charging, which will encourage more people to acquire their first electric vehicle.
NOTE TO INVESTORS: The latest news and updates relating to Ideanomics Inc. (NASDAQ: IDEX) are available in the company’s newsroom at https://ibn.fm/IDEX
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