The U.S. has a unique weapon of automotive mass destruction: Tesla, which also produces cars in China, and soon Europe.
As anyone who follows the EV news knows, Europe and China are far outpacing the US when it comes to EV adoption. As European automakers, and even European oil companies, are racing to prepare for the coming electrification revolution, in the US, political leaders seem to feel that propping up the century-old fossil fuel-based transport system is the priority of the day, and many people see it as a political issue, important only to those who care about such trivial things as clean air and the future livability of the planet.
However, some folks of a more conservative persuasion understand that electrification is a national security issue. Whereas the democratic nations of Western Europe are allies as well as trading partners of the US, authoritarian China is increasingly seen as a strategic rival. As Myles McCormick reports in the Financial Times, a group of senior military and business leaders recently warned that the US is at risk of ceding leadership of the global auto industry to China, and becoming dependent on the Asian giant for critical raw materials and supply chains.
China is securing control of assets all along the electromobility supply chain, from mineral extraction to battery production to vehicle manufacture, as the advocacy group Securing America’s Future Energy (SAFE) recently pointed out.
If the US government fails to match the measures China and Europe are taking to advance EV adoption, the US auto industry could be “reduced to a small share of the market, producing electric vehicles that are not as advanced and as attractive as those produced by China and by Chinese subsidiaries, and a loss of jobs, industrial depth and technological skill,” said SAFE spokesman Admiral Dennis Blair, a former US Director of National Intelligence.
“[China has] more electric vehicles purchased in their market, they have more companies, they build more batteries, they have gone around the world for rare earths and other metals that go into these vehicles and locked up or gained preferred access to many of them,” Admiral Blair said. “So they have a jump on the direction that the electrical vehicle industry is going.”
According to Simon Moores of Benchmark Mineral Intelligence, China produced 72 percent of the world’s lithium-ion batteries in 2019, whereas the US produced only 9 percent. And China isn’t waiting for us to catch up—the country is building a new battery factory every week.
Above: China dominates the world's production and supply of 'rare earths' vital for battery electric vehicles (YouTube: Financial Times)
China “has not just built an entire suite of supersized battery megafactories for its auto industry, but the supply chain to feed them,” said Moores. “China produces only 23 percent of key battery raw materials combined. Yet it produced 80 percent of the next step in the chain—battery chemicals—and 66 percent of cathodes, 82 percent of anodes and 72 percent of battery cells.”
SAFE recommends the expansion of federal purchase incentives for EVs, as well as the development of a more diverse supply chain for strategic minerals.
According to McKinsey, 1.2 million EVs were sold in China in 2019, compared to 320,000 in the US. And Chinese automakers are not confining their ambitions to their home market—as we write this, the first Europe-bound shipment of EVs from China’s Xpeng Motors is on its way to Norway. Perhaps the unkindest cut of all: even American automakers are now producing electric models that are sold only in China—not in North America.
Of course, the US does have a unique weapon of automotive mass destruction: Tesla (which also produces cars in China, and will soon be doing so in Europe). However, Elon Musk has often warned about a shortage of the raw materials needed for battery production, and encouraged North American companies to develop more sources of supply.
SAFE’s warning seems particularly timely in light of the upcoming US presidential election. Joe Biden has unveiled an extremely detailed environmental plan that includes substantial support for the EV industry, including measures to maximize the green jobs created here in the US. Donald Trump’s decision to gut federal fuel economy standards has curtailed US automakers’ interest in electrification, and if he succeeds in his quest to take away states’ rights to set their own more stringent standards, it could deal a crippling blow to the US EV industry. After California announced a plan to ban the sale of fossil fuel-powered cars after 2035, a White House spokesman called the proposal “alarming,” and said “President Trump won’t stand for it.”
Admiral Blair echoed the views of many EV industry observers, who believe that electrification should not be a partisan issue. “Long-term progress really depends on a bipartisan approach to these things that will survive the swings,” he said, and reiterated that the transition to EVs should be considered “a national security issue, which is bipartisan.”