The Biden administration may have grand ambitions to revitalize U.S. competitiveness in the race for global battery dominance, but recent data demonstrates the new government has inherited a weak domestic manufacturing base.

Imports of several types of lithium materials to the U.S. have been decreasing in recent years, according to an analysis by S&P Global Market Intelligence.

For instance, imports of processed lithium chemicals such as lithium carbonate and lithium hydroxide declined 31.9% year over year to total 2.5 million kilograms in the first quarter of 2021. Between 2018 and 2020, imports of these chemicals tumbled 29.8%. First-quarter imports of refined lithium to the U.S. also slowed, falling 28.9% year over year to 5.5 million kilograms.

Lithium is a key ingredient in lithium-ion batteries used in plug-in electric vehicles, consumer electronics and a broad array of other goods. After companies extract lithium ores or brine concentrates, the material is converted into lithium chemicals and refined. The bulk of lithium extraction, processing and refinement occur outside the U.S.

The slowdown in processed and refined lithium imports to the U.S. comes as prices for lithium climb worldwide in response to growing demand for electric vehicles. The lithium carbonate CIF Asia price shot up 11% in March to reach $10,000 per tonne, largely in response to increasing supply pressures. Market Intelligence analysts recently forecast lithium chemical consumption increasing 23% year over year in 2021.

The downturn in U.S. lithium imports was not surprising to Emily Hersh, a mining consultant and managing director at DCDB Group. Cathode and anode production are a crucial step in the battery supply chain, and the lack of output capacity in the U.S. means that for lithium to get into a battery, "it has to go through a non-U.S. country," Hersh said.

"They would be bringing in a lithium carbonate, and they'd be upgrading it in the U.S. into a battery chemical and then that battery chemical still has to leave the U.S. and go to Asia," Hersh said.

While imports of lithium materials to the U.S. have been decreasing, imports of lithium-ion batteries leaped 86% to 43.7 million kilograms in the final quarter of 2020.

Most of the lithium chemicals flowing into the U.S. do not end up in lithium-ion battery cells, explained George Miller, a lithium analyst at Benchmark Mineral Intelligence.

"The U.S. as a lithium market is very focused around the more traditional, industrial-end applications for those lithium chemicals, as opposed to being used in cathode production and the production of [lithium-ion battery] cells," Miller said. "In the U.S., the majority of lithium is used for technical grade applications that tend to be used in lubricants, ceramics and some glass as well."

When it comes to building out an electric vehicle supply chain, from raw material production to cell manufacturing, the U.S. remains far behind a counterpart such as China, which is "really moving to dominate the electrification market globally," Miller said.

Bolstering battery supply chain security has been deemed a priority by President Joe Biden, who issued a Feb. 24 executive order mandating a review of risks in supply chains for high-capacity batteries and critical minerals.

Biden wants to turn the clean energy movement into job creation, and recent victories such as the settling of an intellectual property lawsuit may give momentum to the construction of new manufacturing sites. The lawsuit regarding electric vehicle batteries was brought by LG Chem Ltd. against fellow South Korea-based manufacturer SK Innovation Co. Ltd. and was settled in April, which avoided an intervention by the Biden administration.

The administration has also made decarbonizing the transportation sector central to a wider goal of achieving net-zero greenhouse gas emissions by 2050. Infrastructure legislation bandied about between partisan lanes on Capitol Hill could inject billions into the electric vehicle sector, which in turn would necessitate a domestic manufacturing base.

On March 31, Biden announced a plan to boost infrastructure development, in part by pumping $174 billion into electric vehicle development. If approved, the plan could also provide $400 billion in tax incentives for clean energy generation, with an emphasis on using lithium-ion batteries for large-scale storage.

But the country still has a long way to go if it wants to become a leader in lithium markets, according to Chris Berry, an independent energy metals analyst.

"The U.S. is not a player right now when it comes to lithium production or lithium refining," and prioritizing innovation will be key to bringing the country into the running for battery production and more, Berry said.

"We are talking about investing potentially billions, or arguably trillions, on green infrastructure," Berry added. "Even devoting a fraction of that capital to cleaner or greener lithium extraction methods — that is how we compete. We compete at the low-end of the cost curve by leveraging technology."