Analysis | US just can’t keep up with China’s industrial book – The Washington Post | CarTailz


The American industrial policy attempt to build electric vehicles and batteries has failed once again. The recently released list of companies selected for $2.8 billion in funding bears this out. They look more like late-stage R&D projects than scalable companies.

Earlier this month, the Biden administration announced the first batch of projects funded by the president’s bipartisan infrastructure bill to improve domestic EV battery production and the power grid, as well as “for materials and components that are currently being imported from other countries.” “, to expand. Rather than focus on manufacturing — its greatest weakness — the US Department of Energy has supported companies that process lithium, “demonstrate new approaches” and recycle power packs.

That’s misguided — and won’t bring the US any closer to the weight of China’s battery economy. The biggest problem is spending targeting parts of the supply chain that are either not as difficult to set up and scale, or further down the value ladder, like processing lithium, graphite and other materials. It doesn’t focus enough on cell and cathode fabrication, the most important elements. Government investments are expected to be matched by recipients and will reach more than $9 billion.

Of the 20 participating companies, most will either separate and process materials or manufacture components such as anodes and separators. None focuses on the manufacture of battery cells and packs or the extraction of raw metals and elements – the key processes at the beginning and end. Manufacturing cells is initially difficult due to constantly evolving manufacturing techniques, including automation. In addition, their size and electrical charge, along with elements such as nickel and cobalt, make them difficult to handle and quality control. The search for experienced battery engineers is also becoming increasingly difficult.

It’s unclear where the supplies of nickel, lithium and cobalt will come from or how the U.S. facilities will be expanded, as the bulk of the investment has been in under-tested power pack technology that is not yet commercially viable. In the meantime, big battery manufacturers have announced big plans – and they too will need supplies.

This patchwork approach will not work. Countries like Indonesia, for example, are taking over the processing of raw materials because they have huge nickel resources. Jakarta has used this to attract large companies such as Tesla Inc., LG Energy Solution Ltd. and Contemporary Amperex Technology Co., and will then use this to build a domestic supply chain while retaining a large stake in the global one. Seen from this perspective, it makes no sense for the US to focus on different parts of the value chain. Meanwhile, some of the Biden administration’s funding should help create “high-paying” jobs as those sectors grow — in theory. If these projects are not scalable or commercially viable, how will they promote employment?

The sad reality is that the US has been here before. This is reminiscent of the American Recovery and Reinvestment Act of 2009, when the Obama administration committed more than $90 billion to clean energy. It should drive innovation, modernize the grid and boost production. Companies like industrial battery maker A123 Systems LLC and several other energy companies that took on $800 million in grants and loans and promised thousands of jobs eventually filed for bankruptcy.

Billions of dollars have been spent on lithium-ion power packs, recycling, EV components and charging stations. Over a decade later, the US was still unable to meet its own goals, including green sector and technology dominance, nor was it able to get ahead of China. That’s because it has never tightened its political mishmash and failed to target key areas it could have had a firm grip on.

Ironically, that was around the same time that China had turned its attention to batteries — a tipping point for electric vehicles and energy storage. In 2012, when the A123 went bust, Beijing declared the sector a key strategic industry. The country’s focus on its automotive sector and deep supply chain has catapulted it onto the world stage, allowing manufacturers like Tesla Inc. to slash prices and produce hundreds of thousands of vehicles. Elsewhere, automakers have been unable to handle incessant price hikes without eroding margins or producing enough electric vehicles to meet emissions targets and promises.

At this point, it’s not really a competition between America and China, the world’s largest electric vehicle market and battery maker. It is now about US industrial policy against, well, itself.

More from the Bloomberg Opinion:

• The holes in America’s Chinese electric car policy: Anjani Trivedi

• What happened to the electric vehicle supply chain in the US?: Anjani Trivedi

• How China’s car batteries conquered the world: Anjani Trivedi

This column does not necessarily represent the opinion of the editors or of Bloomberg LP and its owners.

Anjani Trivedi is a columnist for Bloomberg Opinion covering industrial companies in Asia. She was previously a reporter for the Wall Street Journal.

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