However, he adds that the timelines are “hugely ambitious” and that the bill “basically sets goals that people may not be able to meet.”
Last week, E&E News reported that climate activists are already concerned about whether car manufacturers can meet the new requirements.
Battery production is growing in the US and Europe, and leading domestic automakers, like GM, recently announced investments to build massive new battery factories. But the US still has a lot to catch up on.
About 80% of lithium ion battery cells are made in China today. The country also dominates the supply chain for many of the materials used in batteries, including critical minerals, said Henry Sanderson, executive editor at Benchmark Mineral Intelligence.
Nearly all the graphite used for battery electrodes comes from China and is processed there, Sanderson says. Lithium, which is mainly mined in countries such as Australia and Chile, is also processed in China.
Nickel can also be difficult to find for automakers looking to qualify for the credits, Sanderson says, since most of it is processed in Indonesia, which doesn’t have a free trade agreement with the US.
Planning and building new mines can take more than seven years, meaning the mineral supply isn’t something that can change overnight. Recycling could eventually yield a significant amount of battery materials, but it’s unlikely to make a dent anytime soon, Sanderson says, as the number of EVs currently reaching end-of-life cannot keep up with exponentially rising demand.
In any case, setting battery requirements linked to consumer tax credits will not be enough to actually transform supply chains, Nahm says. Other support programs included in the new bill, such as production tax credits and loans for the construction of new factories, will also be critical.
The ambitious tax cuts for electric vehicles could play a role in building domestic battery production and boosting new supply chains in the US. But whether those changes will come soon enough to keep up with booming EV sales remains an open question — one that will likely determine how effective the new law is in transforming America’s vehicle fleet.