➤ Electric vehicle growth is expected to generate economic activity even in politically conservative parts of the U.S.
➤ Refining capacity for battery materials, such as lithium and rare earths, presents a major obstacle to a more domestic supply chain for EVs.
➤ It could be difficult to create a net-zero emissions economy without developing critical minerals supply in the U.S., but the industry must first break China's grip on refining capacity.
Zero Emission Transportation Association Executive Director Joe Britton.
Source: Zero Emission Transportation Association
The Zero Emissions Transportation Association, or ZETA, is a coalition of industry players, advocates and nongovernmental organizations advocating for policies that ensure 100% of new cars sold by 2030 will be electric. The group says achieving the goal will help avert the worst impacts of climate change while creating thousands of new jobs.
EV sales have been growing rapidly. In May, U.S. penetration rates for passenger plug-in electric vehicles rose to a record high of 6.7%, according to S&P Global Commodity Insights research. Still, several obstacles remain before greater deployment, such as consumers' anxieties around charging, a lack of refining capacity for battery materials and opposition to domestic development. The U.S. is in a good position to increase its production of raw lithium, but it needs to invest in refining or it could lose control of the supply chain.
S&P Global Commodity Insights spoke with ZETA Executive Director Joe Britton about the challenges facing the battery industry. The following conversation has been edited for clarity and length.
S&P Global Commodity Insights: ZETA's policy platform aims to create jobs in every congressional district as it looks to increase the deployment of EVs. Given the diversity of regions in the country, what does that look like?
Joe Britton: You've got folks that are installing charging stations, people that are improving the grid, that are servicing charging stations. Obviously, then you've got the automotive manufacturers themselves.
Rivian Automotive Inc. took over an old Mitsubishi Motors Corp. plant that had shuttered in Illinois. Now there are 5,000 people working there every day where they thought that maybe that plant was never going to reopen. Same thing with the Fremont plant in California that General Motors Co. sold. It was a former Chevy Cruze plant that GM had shuttered and then Tesla Inc. took over.
You've got some of the automotive jobs that are coming back, but you've also got a ton of battery jobs. If you were to look, there's this whole new corridor that's developing. You've got the traditional kind of transportation, manufacturing space, the Michigan/Ohio area, but now it's Kentucky, Tennessee, Georgia, Alabama, Arkansas, Oklahoma, the Carolinas — all billion-dollar announcements and huge investments in cars and batteries in this sector moving forward.
What are some of the greatest impediments to the wider deployment of EVs in the U.S.?
Maybe a year ago, two years ago, people would have said, "there's range anxiety." Actually, to some degree, it's charging anxiety. It's something that's new — the charging experience is different than the gas station experience. I happen to believe it's far better.
Charging happens in the background, rather than in the foreground. If you're low on gas, it's, "Hey, I got a problem, I need to go do something about that." Whereas charging happens while you're doing other things in your life, right? You're plugging in overnight, you're plugged in while you're at the grocery store. With gas, you wait until you're close to empty, and then you go fill up.
So, most people are thinking in the mentality of, "Gosh, how long does it take me to charge from zero to 100%?" But really, you're plugged in charging at a half-day at work. You're going from 40% to 85%, or you're going from 50% to 100%, while you're doing other things in your life.
It's a little bit of a mentality shift. But, one of the things that we found is that if you get somebody behind the wheel of an EV, they're 95% likely to never go back to an internal combustion engine vehicle. So, the products are selling themselves. Our challenge, really, is to expose more and more Americans to EVs.
What needs to be done to ensure more of the supply chain related to EV manufacturing is based in the U.S.?
The area that most people think about is lithium production. We've got four lithium production sites — one's up and running, [Albemarle Corp.'s] Silver Peak which is about 5,000 metric tons a year. You've got others — Lithium Americas Corp., ioneer Ltd. Albemarle is looking at Kings Mountain in the Carolinas, which was a legacy site.
I think we're at 5% or 6% EV sales. We could easily be at 25% EV sales in a couple of years and use 100% U.S. sourced lithium — which is not to speak of Canada and Mexico in the North American supply chain. With the critical minerals themselves, I think we can have a secure North American supply chain. The biggest challenge really is the refining capacity.
What you need for the scale, the refining capacity, is to have enough battery cell manufacturing to justify co-locating the refining facility. Right now, no matter where some of these critical minerals are developed, they end up going to Asia for reforming and refining. At that point, you kind of lose a chain of custody of where they were developed and [there are] other kinds of labor and environmental concerns.
Are there any federal or state policies that would be particularly helpful to accelerate EV deployment in the U.S.?
There's a production tax credit for batteries that is being considered as part of the reconciliation bill. I think that would be a strong accelerant. If we have the battery cell production here, then it would justify building out the refining capacity.
The more we create the battery cell manufacturing here, the more it will be a center of gravity to develop more and more of the refining capacity. This stuff exists. It's not just in China. There's some of this in Canada and Denmark and Chile. The more that we do battery manufacturing here, the more that you're going to see refining and reforming also done here because it'll just make economic sense.
There's a linear equation between battery cell manufacturing and the financing becoming available for refining. Historically, the investment community hasn't wanted to build refining until they knew there were going to be co-located off-takers. If we can develop a secure North American supply chain for this stuff, then have the battery cell manufacturing that justifies co-located refining, that's how we really wrestle away some of the superiority that China has developed by investing for 15 or 20 years in the space.
How do you balance the tension between the environmental benefits of EVs and the environmental impacts of increasing mining, refining and/or manufacturing activity in the country?
There are some groups who take the position that we should not have a North American supply chain at all for these critical minerals. It's very hard to reconcile the needs of a net-zero economy with a demand that we don't do any critical mineral development. Those two things kind of can't exist, right?
We want a net-zero economy. But then there are some groups that don't want hydrogen and don't want critical minerals. We don't have a net-zero economy without batteries and without hydrogen.
If you start from the position that we shouldn't have any batteries or any North American supply chain for minerals, that's a fine point, but that also doesn't reflect the reality we confront in trying to get to a net-zero economy.
Our view is that we've got strong environmental and labor standards here. We ought to make this an American success story by not only creating jobs and supporting manufacturing but also doing right by workers and the environment. We've got a sustainability story to tell, certainly, when you talk about the potential for recycling. So there's a big opportunity for us to do something meaningful, but it's not going to make everybody happy, and it doesn't address every potential downside.
I'm not going to make an assertion that any form of manufacturing doesn't come with some cost. But we just happen to know with EVs, they're 67% less carbon-intensive over their lifetime, which includes manufacturing and fueling and end of life. We know that this is the right answer.
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