A shortage of batteries used in electric vehicles (“EVs”) might create a case of security concerns in the United States. Electric cars use batteries just as combustion cars rely on fossil fuels. Similarly with incidents of oil shortages, electric carmakers can also experience a shortage in batteries.
According to the Department of Justice, the United States sources 90% of lithium, the metal used in those batteries, from Argentina and Chile. Meanwhile, China processes about 60% of the global lithium as well as 80% of the cobalt. The country is struggling to create a plan that will see it continuously refine those raw materials. Despite the push for EV adoption, the Biden administration has stopped mining projects in Minnesota and Arizona that would boost the country’s internal supply of raw materials critical for car batteries.
According to Bob Gaylen, an engineer from General Motors as well as a former chief technology officer from one of China’s leading battery producers, the country has neither the manufacturing capacity nor the raw materials. He said that the country does not have enough batteries to aid the military in case of a war.
The world’s largest battery producer is the Contemporary Amperex Technology (“CATL”) and is based in Ningde, Fujian Province, China. According to Jeffrey Wilson, a research director at the University of Western Australia, there is a possibility that China could restrict exports of lithium hydroxide in order to boost its local production, just like in 2010 when the country had a dispute with Japan and prohibited access to the rare minerals. However, Tom Moerenhout, a Columbia University professor, disproves that, noting that China does not have an interest in doing that.
It can take up to 10 years to set up a mine. Despite the popularity of electric vehicles, the U.S. government has not changed its mindset on mining. The Biden administration recently canceled leases for a Minnesota mine because of environmental concerns. The administration also delayed an Arizona copper project because it wanted to understand the concerns of Indigenous people.
Natural resource wealth has historically been linked to having negative impacts, including corruption, dictatorship and armed conflicts. According to Emily Kilcrease, a senior at Washington think-tank New American Security, this concern is relevant to Bolivia, which has an abundance of lithium reserves. She also added that China’s investments into lithium mines pose a threat to the U.S. supply chains in comparison to political instability.
Some national security experts note that these supply chain concerns might be exaggerated. According to Eugene Gholz, a political science professor from Notre Dame, China’s economy relies on exporting to the U.S., therefore restrictions would only lead to damaging effects. He also adds that linking electric vehicles to national security warnings is a strategy to arm-twist funding from the government, stating Americans have “confidence in the military” in comparison to other public institutions.
Any steps taken to secure a reliable North American supply chain for batteries would help entities such as ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO) to be sure their production will not be halted by geopolitical or other crises that arise from time to time in distant regions of the world.
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