China is kicking America's ass in the EV battery race

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China is kicking America's ass in the EV battery race



In recent years, the relationship between the US and China — the world's economic superpowers — has devolved into an unwieldy tug-of-war between economic interdependence and deep-seated distrust. On one hand, diplomats are trying furiously to maintain a stable world and keep money flowing between the two countries. But at the same time, one of the relationship's most salient features is that it is a contest for control over the technology that will define the 21st century. To get more china tech news, you can visit shine news official website.

In the latter battle there is one area where the US has fallen woefully behind: batteries. China's state-supported enterprises — let's call them China Inc. — dominate in every aspect of the development of batteries for electric vehicles, from the mining and refining of raw materials to the manufacture of the batteries themselves.

"The danger is that we won't have a domestic battery sector and we will totally in perpetuity rely on China to build cells for us," Tu Le, the founder of the consultancy Sino Auto Insights, told me. And without cheap batteries to power fleets of cheap electric vehicles, he argued, companies like GM and Ford "run the risk of becoming regional players and losing their international status."
Until US automakers can source batteries domestically, or from friendly nations, they will depend on maintaining good relations with Beijing. It is an increasingly fraught partnership, even setting geopolitics aside. For the past 40 years China needed foreign automakers to help develop its own car industry through joint ventures. But as China's domestic electric-vehicle market takes off, the tables have turned. Beijing is boosting its homegrown products, and foreign automakers — which already need China Inc.'s batteries to build more EVs — are losing market share.

The winner of the battery war will not only control the electric-vehicle market but also produce thousands of jobs, control the future of mobility, and dictate the West's ability to transition to greener forms of energy.China has been working to dominate the battery space since at least 2015, when the leadership of the Chinese Communist Party crafted the National Key Research and Development Program New Energy Vehicle Key Special Implementation Plan. Despite its long, formal-sounding name, the document sets out a clear goal: to corner the market for key materials like lithium, cobalt, and nickel; invest in their extraction; and build factories for battery manufacturing.

The plan starts at the most basic level of battery production: raw materials like cobalt, lithium, manganese, and nickel. Most of these minerals lie outside China — in countries such as Chile, Australia, Bolivia, and the Democratic Republic of Congo. But China Inc. has negotiated ownership stakes and partnerships with mines all over the world. From 2018 to the first half of 2021, China Inc. invested about $4.3 billion in lithium mines internationally, according to the research firm S&P Capital IQ. And once these minerals are pulled out of the ground, they are shipped to Chinese-owned refineries that transform the metals for use in the final product. By 2019, Chinese companies made up 80% of the world's output for battery materials. This would not have been possible without Beijing's willingness to pay whatever price and withstand whatever losses it took to build the industry.

"At the end of the day even if DC or Brussels or Tokyo manages to support competing suppliers of minerals and companies that can turn minerals and metals into components, the mineral commodity markets are hard to predict," Jane Nakano, a senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies, told me. "It's very difficult for private-sector non-state-supported entities to plan ahead."

In the past, this is where the Chinese value chain would end. The refined materials would get shipped out to the US or Europe where they would then be transformed into batteries. Not anymore: Beijing is trying to do that work in-house.

"In the 1970s and '80s China was exporting minerals to us to make higher-value goods," Nakano explained. "That's precisely the situation the Chinese wanted to get out of. That's why they came up with their tech strategy."