Murkowski, Manchin Introduce Bill to Strengthen U.S. Electric Vehicle Supply Chain
The rapid growth of the electric vehicle (EV) market has nudged virtually every automaker to embrace electrification, signaling a paradigm shift wherein batteries begin to challenge the dominance of oil, which currently accounts for 92% of the energy used in the U.S. transportation sector.
However, upending more than a century of oil addiction is a complex undertaking that will not happen overnight. The supply chain for the critical minerals that are needed to produce EV batteries – including lithium, cobalt, graphite, and nickel – is almost entirely overseas.
Despite having 13% of the world’s lithium resources, the U.S. still only produced approximately 2% of the global lithium supply last year. The U.S. also produced zero graphite in 2018, and the statistics for nickel and cobalt are just as bleak.
A bipartisan bill now seeks to address how minerals, and access to the battery supply chain, is quickly becoming an issue of national security that will be similar to oil today. Introduced by Senators Lisa Murkowski (R-AK) and Joe Manchin (D-WV) on May 2nd, the American Mineral Security Act (S. 1317), would require the federal government to update its list of critical minerals every three years, prioritize workforce development programs in the mining industry, and streamline permitting and review processes for mining operations.
This bill comes at a time of growing anxiety over the United States’ ability to compete in a global battery arms race. At the front of the pack is China, which outwardly expressed its aspiration to dominate the global auto market through its Made in China 2025 plan. To this end, China has subsidized the creation of its own domestic EV manufacturing base and secured access to critical mineral deposits across the globe. The country now produces about two-thirds of the world’s lithium-ion batteries. And even as the Chinese government has announced plans to roll back its EV subsidies, Fitch Ratings still expects its EV market to continue to grow.
Meanwhile, foreign and domestic automakers have recently made eye-popping investments in manufacturing EVs in the US. Earlier this year, VW announced that it would invest $800 million and hire 1,000 new workers to produce electric vehicles at its plant in Chattanooga, Tennessee. Michigan-based startup Rivian became the latest wunderkind of the EV industry this year after receiving sizable investments of $700 million from Amazon and $500 million from Ford. Meanwhile, Daimler Trucks North America announced plans in late April to convert a factory near its Portland, Oregon headquarters to produce electric Freightliner trucks.
The movement towards electrification promises to deliver a tremendous range of benefits to American consumers and businesses. Oil is a volatile and internationally-traded commodity that is subject to rapid price shocks due to geopolitical instability, supply manipulations by OPEC, and fluctuations in the stock market.
Electricity, meanwhile, is domestically-sourced and generated by a diverse mix of fuels. It is also far more stable in price: while gasoline prices oscillated from $4 per gallon in May 2011 to $2.90 today, electricity has hovered around a price equivalence of $1 per gallon.
The challenge, however, is ensuring that the U.S. does not exchange a dependence on OPEC’s oil for a dependence on China’s batteries and critical minerals supply. This topic will be front and center next week at a hearing by the Senate Energy and Natural Resources Committee (chaired by Murkowski) on the importance of mineral security.