Will Biden’s Plan Jump-Start a U.S. Battery Industry?

Cell-making is essential but the President cited batteries just once

For a decade, China has been building battery and electric vehicle industries, making it by far the biggest player in these technologies of the future. Over the last three years, Europe has sought to catch up, putting billions of dollars behind the creation of its own homegrown lithium-ion and EV industries. Today, the pair are more or less the global EV pantheon.

In a speech this week, President Biden made the United States’ first stab, in a decade, at getting fully into the race. He pledged $174 billion in funding, which is a large sum — 72 times the amount President Obama dedicated to EVs and batteries the only other time the U.S. sought to dominate the field.

The money is getting much praise for Biden’s determination to deliver a lot of jobs at union wages. Ahead of an expected mid-decade surge in EV sales, he is also getting good marks for a pledge to incentivize the buildout of a half-million charging stations across the country so people will worry less about becoming stranded with an empty battery.

But escaping much attention is that, if you are thinking about the technological future, Biden fell short on arguably the most important game field of all. He omitted any vow to stimulate the manufacture of actual batteries — the nerve center and most valuable single component of an EV, accounting for a quarter or a third of the sticker price. It’s equivalent to General Motors or Ford neglecting to nail down the sourcing of their engines. If you are not making your own cells, you are both surrendering the profit and adding import cost to your bottom line. Domestic cell-manufacturing factories and a supply chain of raw materials are essential fundamentals to the EV business, explaining China and Europe’s obsession with establishing their own industries far ahead of demand.

In a post Wednesday, Benchmark Mineral Intelligence, a London-based lithium-ion research firm, said it is tracking the construction of 78 new battery gigafactories around the world. If they are all built, they will bring the total number to 200 this decade. China dominates the race, with 148 of the planned or existing gigafactories; Europe accounts for 21 and the U.S. 11. Today, 77% of the world’s lithium-ion capacity is in China, and even as the U.S. and Europe ramp up, China will continue to possess 67% in 2030, Benchmark said.

Biden isn’t responsible for the near-absence of the U.S. in the battery competition — Tesla, for instance, has been ahead of China on every front in the EV and battery contest. But Tesla is a company not an industry, and the other American automakers have conceded the field to their Chinese and European counterparts. Industry timidity being the reality, Biden is forced into a position of attempting to seed the ground so the automakers or other players feel safer going big in batteries.

Yet the word “battery” appears just once in the plan Biden released Wednesday.

The Biden plan is long — 11,770 words released as a fact sheet that prints out to 34 pages — and impressive, covering a span of ills that have dogged the country for decades. If one were to pick out an emphasis, it would be jobs — Biden is clearly fixated on lots of jobs attached to union wages and protections.

Its most conspicuous technological idea is the charging stations because it answers the number one questions of every potential mass-market buyer — where will I charge up, and will I be able to do so relatively quickly? John DeBoer, head of Siemens eMobility solutions, calls Biden’s plan “a significant step change” in the United States’ readiness for the arrival of EVs. “It’s a critical move for the United States,” DeBoer told me. “We are in the lowest quartile for electric vehicle infrastructure for all G20 countries… We need to move.” DeBoer said the 500,000 new charging points, on top of 100,000 already installed, would instantly move the U.S. into the top 20% of countries in terms of EV infrastructure.

The stations are not cheap, perhaps explaining their relatively slow rollout to date. Ordinary charging points, the kind you can do at home, cost roughly $1,500 each, with around 10 of them often clustered together in a parking lot, DeBoer said. DC fast chargers, allowing for 80% charge in 20 or 30 minutes, cost from $25,000 to $100,000, depending on the sophistication of the equipment.

This part of the Biden plan has had a knock-on effect, pushing up the share price of ChargePoint, the largest charging network in the U.S., by 32% in two days of trading Wednesday and Thursday. It went up another 3% in after-hours trading Thursday.

The plan also would also change how EV rebates are paid out: rather than a rebate on taxes the year after a purchase, buyers would receive the benefit on the spot, thus directly lowering the vehicle price. The plan didn’t say how much the rebates would be — they are currently $7,500 — nor if Tesla and GM would be eligible, since both have gone past the 200,000-vehicle threshold.

But in the battery and financial communities, there is much focus on a provision that would broaden the investment tax credits available for battery technologies. As of now, so-called 48C tax credits, referring to a section of the tax code created in the Obama administration, had been available only for batteries associated with solar power. But Biden is proposing that batteries alone be qualified. If the legislation passes, the provision would apply to stationary and EV batteries.

In a note to clients Wednesday, Wolfe Research said it expects the legislation to make 48C funds available for the construction of battery cell plants. Currently, the U.S. has about 42 GWh of battery capacity, more than Europe’s 28, according to S&P Global. But in 2025, Europe’s capacity will grow to about 368 GWh, while the U.S. will be at just 91. Wolfe reckons that the U.S. will need at least 1,650 GWh of capacity by 2030 to keep up with expected EV sales, seven times as much as Benchmark forecasts will actually be built under current plans.

That’s where Biden’s plan will have to come in.

Editor at Large, Medium, covering the turbulence all around us, electric vehicles, batteries, social trends. Writing The Mobilist. Ex-Axios, Quartz, WSJ, NYT.

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