Putting your finger in a car door isn’t going to hurt as bad as the shortfall in EV batteries is going to do.
During a tour of Rivian’s plant in Illinois last week, CEO RJ Scaringe told reporters this: The recent semiconductor shortage that has been hurting the auto industry is just a “taste” of what we’re going to feel on battery cells in the next two decades. Every part of the supply chain is having a hard time keeping up with the high production goals of electric cars.
At the very start, there is a lot of trouble.
We are talking about raw materials. In order to make a lithium-ion battery, raw materials like lithium, cobalt, and nickel have to be bought. This costs about 80% of the price. But as companies try to get their hands on those supplies, prices have soared. In the last year, Benchmark Mineral Intelligence says the price of lithium alone has gone up more than 480 percent, which is a lot.
Elon Musk, the CEO of Tesla, said that lithium battery prices were so high that he might have to start mining for lithium himself because they were so high. Friend, we’re with you.
It also costs more to buy lithium-ion batteries because they make up at least 30% of the cost of an electric vehicle. Rivian and Tesla have both raised prices recently, blaming high costs for raw materials as part of the reason for the rise.
There are also materials that aren’t made in the United States of America,
The US Geological Survey says that in 2020, the country will have imported more than half of the 46 minerals it needs and all of the 17 minerals it needs. One of the biggest suppliers is China, which is the world’s best at making lithium-ion batteries. China has a history of limiting trade for political reasons, though.
Because the White House thinks that EV supply chain is important for national security, that’s enough to scare them off, Last month, President Biden used the Defense Production Act, which gives the government access to $750 million to invest in domestic mining operations for critical raw materials needed by battery manufacturers. This money can be used to invest in mining projects in the US. That’s not to say that new mining projects or battery plants in the United States might not happen for up to a decade, though.
This is how you zoom out: As a goal, President Biden wants about half of all new cars sold by 2030 to be electric. But because there aren’t many ingredients, that’s like asking MasterChef contestants to make a meal with two footballs and a single noodles. Rivian’s Scaringe says that “90% to 95% of the supply chain is not there.”