Ellen R. Wald, a non-resident senior fellow at the Atlantic Council Global Energy Center, has called for the United States to address its escalating lithium demand for electric vehicles and batteries. She suggests this could be achieved by revising policies such as those from the Inflation Reduction Act that hinder crucial mineral supply chain development and by reducing reliance on critical minerals from China.
In an article penned for the Atlantic Council, Wald highlights that the U.S. economy's increasing demand for lithium is not stemming from technology devices like iPhones or laptops, but rather from electric vehicles and semiconductors. She advocates for the United States to develop supply chains for critical minerals required for lithium production that are independent of China and Chinese companies.
Wald further points out that the United States has recently become more dependent on China not only for materials such as antibiotics but also in the lithium industry. Here, China maintains 80% of world battery cells and 60% of the EV battery market. From a national security perspective, she notes that the U.S. military relies on batteries designed for specific operations and materials. A potential threat arises from foreign lithium-ion cell producers who might prioritize commercial customers over military requirements under influence from Chinese government interests.
A 2021 White House report supports Wald's observations by revealing that between 2009 and 2019, China directed $100 billion in subsidies, rebates, and tax exemptions to Chinese companies and consumers to establish dominance in the global lithium refining industry.
Wald accuses China of employing "anti-competitive practices such as subsidizing production when demand was not high enough and dumping products at below-market prices onto the international market."
According to Wald, the Inflation Reduction Act (IRA) aims to counter China's dominance in "critical mineral" supply chains by offering tax incentives for electric vehicles (EVs). To qualify for the full $7,500 tax credit, a portion of a battery component's value must not originate in China and must be produced in North America. Wald points out that "critical mineral" mining, refining, and battery manufacturing cannot meet the timeframe and regulatory standards set by the IRA. Consequently, battery and automobile manufacturers struggle to source components domestically, impacting consumer demand for EVs. She explains that many EVs are priced higher than gasoline cars, but the tax credit made them affordable. With reduced eligibility for the credit, consumer demand is expected to decline, prompting manufacturers like Ford to cut production, potentially undermining the intended policy goal of stimulating new lithium-ion battery supply chains.
