The Race for Electric Vehicle Battery Manufacturing Won’t be Won for Cheap

There’s optimism in the zero-emission vehicle world right now and it looks like we’ve rounded an important corner towards a clean transportation future. Vehicles in almost every category are coming online, policy innovations are popping up to support clean fuels, and real investment is being pumped into both vehicles and charging infrastructure.

There are also broad coalitions at work advocating to bring electric vehicle (EV) battery manufacturing competitiveness to the top of our nation’s funding priorities. CALSTART and its members have been active and visible participants in this process, and we have noted the inclusion of $6 billion in the bipartisan infrastructure bill that supports both battery cell and pack manufacturing, as well as “upstream” processes. Unfortunately, that’s not enough to get the job done.

There is a fiercely competitive race going on in this industry and other countries have been bolstering their manufacturing capabilities for years. China has 90 EV battery manufacturers and has invested more than $10 billion in government subsidies since 2012. China, South Korea and Japan have strong industrial policies in place that are designed to make them global leaders in the technology and essential workforce that support EV battery manufacturing. Countries such as Poland and Hungary are currently opening EV battery manufacturing facilities to meet the growing opportunity in the transportation of the future. Our lack of investment here at home has resulted in only four major battery factories currently operating in the United States and market analysts project that by 2030, the U.S. will have a mere 10 factory sites. We need to act aggressively to change this.

The current bill does not include the tax credits needed to encourage competitive manufacturing here. Tax credits are a viable and effective tool to ensure onshore manufacturing and it is the approach being taken by Congress in the budget reconciliation bill to bolster the strategically important semiconductor industry. We shouldn’t wait for an electric battery shortage to encourage manufacturing here. To catch up and be competitive in this global market, we need at least $15 billion in such tax credits.

Additionally, while the bill does include a quarter million dollars in research and development funding, CALSTART and its coalition partners have assessed the needs at $1 billion to bridge the gap and take global leadership through work and development at our world-class universities and national laboratories.

Our broad-based coalition, with members ranging from lithium-producers to automotive manufacturers, will continue to call for these market-supporting policies in both the infrastructure bill and throughout the budget reconciliation process. We are encouraged by the impact our voices have had so far but call on Congress to drive for aggressive investment and support for policies that will secure the nation’s long-term competitiveness in the global zero-emissions vehicle supply chain.

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Download this email template to personalize and send to your legislator, along with the white paper on the Federal policies needed for the U.S. to win the EV market.