The adoption of electric vehicles is a priority for the Biden-Harris Administration, and they have set a very ambitious goal: increasing EV market share to 50% of all vehicle sales by 2030. President Biden also plans to decarbonize the fleet of 600,000 vehicles. by 2035, replacing all of them with EVs. However, to achieve widespread adoption of EVs in the US, there are two critical requirements:
- Have adequate charging infrastructure for millions of EVs.
- Creating a solid national EV battery supply chain.
The federal government is aware of these requirements and multibillion-dollar funds have been announced to help meet them. The Electric Vehicle Charging Action Plan includes a $7.5 billion fund to help deploy 500,000 electric vehicle charging stations across the U.S., where $5 billion will be provided to states and 2.5 billion dollars to key corridors and the communities around them.
However, the US must also be able to manufacture the millions of batteries needed to support a large electric vehicle market. In early May 2022, the Biden-Harris administration announced a $3.1 billion fund to support domestic battery manufacturing and recycling. Although the EV market is growing in the US, automakers still rely on mining and offshore production. Critical materials like lithium and cobalt come primarily from abroad, and the Biden-Harris administration wants to improve local supply chains.
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Why local battery manufacturing is critical to the US electric vehicle market
The COVID-19 supply chain has revealed the fragility of global supply chains. Energy markets were already suffering from high inflation and the conflict between Russia and Ukraine increased volatility even further.
- Renewable generation, energy storage and electric vehicles can help the US minimize the impact of these external factors.
- For example, building owners who generate their own energy and charge their own fleet of electric vehicles are much less affected by expensive gasoline and high electric rates.
Solar panels and wind turbines are now capable of generating electricity at a much lower cost than fossil fuels. However, these production technologies depend on energy inputs that cannot be controlled, while fossil fuels can be stored and used at any time – this applies to both transport and energy production.
Batteries have the same scaling flexibility that has made solar panels so successful. They can be scaled with several megawatt-hours of capacity for grid applications or with just a few kilowatt-hours of capacity to be used in homes and electric vehicles. With battery storage, the transportation sector can potentially operate on renewable electricity instead of fossil fuels.
The $3.1 billion fund announced by the Biden-Harris administration will be used to increase local battery production capacity and will be managed by the US Department of Energy. This includes financing for the construction of new facilities and also for modernizations and capacity expansions at existing facilities. There is also a smaller fund of US$60 million, which will be used for battery recycling programs.
According to a New York Times article , the US has enough mineral resources and production capacity to create a local EV battery supply chain, completely independent of external sources. The U.S. lithium-ion battery market could become 20 to 30 times larger over the next decade, but only if a robust supply chain exists to support its growth.
