Biden May Invoke Defense Production Act For EV Battery Materials

Desperate times call for desperate measures.

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Steven Loveday

By: Steven Loveday

Mar 31, 2022 at 8:58am ET

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According to multiple reports from major news outlets, President Biden may move forward with the US Defense Production Act, an old power play that would encourage and even enforce the mining and production of minerals used in electric car batteries.

We saw a similar situation during the Trump presidency when companies were encouraged to manufacture masks and ventilators. Biden actually used the powers early in his presidency to increase the production of supplies needed to deal with the COVID-19 pandemic.

Essentially, the Defense Production Act gives the President the power to require various businesses and companies to shift their priorities to suit the government's needs during a time of war, conflict, or other hardship. However, in the past, many US Presidents have talked about the act and encouraged its use, though not officially mandated it. If invoked and enforced to its full potential, the act could allow the government to actually fine or jail people who refuse to comply with its orders.

At any rate, we're in the midst of an oil and gas crisis due to the Russian invasion of Ukraine. Not to mention the lingerings of one of the worst global pandemics in history, supply chain shortages, and epic inflation. While one of the first priorities right now seems to be getting the price of gas to retreat, fixing the supply chain situation is crucial. As most automakers ramp up their EV efforts, batteries are already in scarce supply, and it's likely only going to get worse.

Not long after the Russian invasion of Ukraine first began and gas prices soared, Tesla CEO Elon Musk tweeted:

Certainly, Musk is aware that Biden could force help for the mining and production of battery materials, which would help Tesla and lead to cleaner energy. However, producing battery packs and new EVs to put them in isn't something that's going to happen overnight. More specifically, it's not going to get people who can't afford gas back on the road in a hurry.

That said, it seems like a wise plan as we look to the future, with plans to greatly reduce our dependency on foreign countries for oil. However, in the short term, helping people afford to fuel their cars at any cost is arguably more pressing.

Recent reports from the likes of Bloomberg and Automotive News suggest that President Biden may use the Defense Production Act as early as this week. Teslarati notes that the President could push for the mining and production of a host of minerals used in EV battery cells, including cobalt, graphite, lithium, manganese, and nickel.

People familiar with the situation claimed that Biden could provide funding for companies to help with the mining and production as part of a $750 million effort. Moreover, he could work with battery recycling companies to ramp up recycling and reuse of key materials.

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Regardless of whether or not the President moves forward with using his powers to mandate such situations, it's interesting to consider. While such efforts won't compare to the immediate impact of helping families put gas in their cars, it could work to make sure we're not in a situation like this again in the future.

As part of the Biden Administration's plans to curb climate change and promote electric vehicles, steps to increase domestic mining, production, and recycling of EV battery cell materials arguably just makes sense. Fortunately, the administration has already earmarked $6 billion from the infrastructure bill to assist with the US battery supply chain. We'll have to wait and see how it all plays out.

Sources: Bloomberg via Teslarati, Automotive News

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