Can U.S. make EV batteries without China? Not yet.

China may have a 'lock on key parts' needed for
EV production. (Kumpan Electric photo, Unsplash)

When it comes to building electric cars, the industry may have to choose between tax incentives for buyers or minerals and parts from China, reports Jeff St. John of Canary Media. "Last week, the Biden administration released long-awaited proposed guidance for how it plans to enforce one of the most complex and controversial aspects of the electric vehicle incentives created by the Inflation Reduction Act: the requirement that the country's fast-growing EV and battery industries avoid using materials supplied by China, a geopolitical rival that has so far dominated clean energy manufacturing."

The requirement leaves companies that have "spent more than $100 billion establishing U.S.-based EV and battery factories. . . confronting the reality that, under the proposed rules, virtually none of the EVs they are currently manufacturing will still be eligible for the law's $7,500 federal tax credit as of 2025," St. John writes. "Under the proposed guidance from the Treasury Department, electric vehicles containing any battery component ​'manufactured or assembled by a foreign entity of concern' will no longer be eligible for the tax credit starting next year. In 2025, electric vehicles that ​'contain any critical minerals that were extracted, processed, or recycled' by a foreign entity of concern will no longer be eligible for the credit."

The ability of the U.S. to source all the critical minerals for lithium-ion EV batteries without doing business with China seems unlikely. "China has built a commanding lead in every step of the global EV supply chain, from the refining of minerals to the production of cathode and anode materials and the manufacture of battery cells and EVs," St. John reports. "Today, it's very difficult to find a lithium-ion EV battery that doesn't contain some portion of minerals or components processed or made in China or by a Chinese-based company."

Meanwhile, U.S. companies and partners from Europe and Asia are trying to catch up to China by "building domestic EV and battery manufacturing capacity," St. John explains. "They remain largely reliant on mineral and materials supply chains controlled by Chinese firms."