China’s Massive EV Battery Industry: Can the U.S. Catch Up? | WSJ U.S. vs. China

- This is a nickel cobalt

battery

, popular in electric vehicles in the US and Europe, and this is a lithium iron phosphate

battery

, also known as LFP battery, which is popular in China. It has a shorter range, but is cheaper to manufacture, less prone to fire, and lasts longer. Both batteries were manufactured by CATL, a Chinese company that is the largest manufacturer of electric vehicle batteries in the world. Of the 10 largest electric vehicle battery companies, six are Chinese. China is the dominant force in electric vehicle battery production, while the United States relies heavily on foreign batteries. - The United States and China are in a David and Goliath situation when it comes to battery production. - We are comparing how the United States and China compare in the four main stages of battery production.

From final assembly to the origin of raw materials. China assembles more than 2/3 of the world's electric vehicle battery cells. American automakers are far behind. Several companies have outlined plans to build plants in the United States. But changing battery production is difficult. Panasonic, a Tesla partner, learned this when it began building a battery plant at Tesla's Nevada gigafactory. Panasonic discovered that it could not simply import equipment from Asia. Different safety standards and different operating conditions made it a challenge. It also had to train workers to make batteries, a complicated process in which small mistakes can have major consequences.

After years of their joint battery business operating in the red, Tesla and Panasonic's cell production has become profitable and is now a model for other automakers to follow. Other companies have found that getting EV battery factories up and running takes longer than expected. - Towards the end of the supply chain is where the United States definitely looks like it can make the biggest strides and then try to get back to traditional mining and processing from there. - It is the first parts of the supply chain that are most difficult. Before finished battery cells can be manufactured, it is necessary to build all the components that make it work: the anodes, cathodes, separators and electrolytes.

China is the world leader in the production of these components. The United States is far behind. - You are talking about working with very specific chemicals and materials and turning them into vital products. That's why there are a lot of safety tests and everything must be done very carefully. That's another reason why China having years of leadership in this space is so critical because it has the knowledge, it can adapt to new technologies and it has been doing so for a long time. Both of these things together make it a truly Herculean task for the United States to

catch

up. - The US government has invested billions in companies trying to do this domestically.

But companies may need years to develop the technology and ramp up manufacturing. Automakers accustomed to slower development cycles are trying to revise battery development strategies in response to changes in mineral prices and technology. For example, companies have two main options when it comes to cathodes, the most expensive component of battery cells: nickel-cobalt, widely used in the United States and Europe, or LFP, common in China. American companies have historically preferred nickel-cobalt batteries for their long range, but volatile mineral prices have led some automakers to turn to LFP batteries. While these batteries cannot travel as far between charges, they typically last longer and have better thermal stability.

That is, they are more resistant to heat. Some American automakers are particularly interested in them for entry-level vehicles. - Iron phosphate is all the rage now, but companies are also investing heavily in next-generation batteries. Companies are always innovating and trying to change battery chemistry. That's why envisioning the supply chain now and how it might change is really challenging. - Before components such as cathodes and anodes can be manufactured, it is necessary to process and separate the raw materials that make them up. Currently, the United States does little of this while China is the world leader. And companies often have trouble building chemical processing facilities in the United States. - The bureaucracy here between the regulations and then the local, state and federal rules, all of that is a complicated process that will take time and a lot of resources.

Then there is often local opposition to these installations if there are concerns about consuming huge amounts of water or energy or even damaging the local environment. And the last big issue is labor and supply chain issues, like those we've seen during the coronavirus pandemic. - And then there is the question of obtaining the raw materials. Most of the minerals in electric vehicle batteries are not mined in the United States or China. They are imported from countries such as Australia, Indonesia and the Congo. China has strong relations with these countries from which it can source raw materials.

The United States is building new mines domestically and also forging international partnerships, but both approaches pose challenges. It can take up to a decade or more to bring new mines online in the United States, and raw materials are only useful once they can be processed. - American companies are also trying to go to other countries and say, "Look, we will develop a mine here," in a country like Ghana or in Africa, "and then we will send that material to the United States to be processed." "The challenge is that it is much more difficult to build even the processing facilities in the United States.

In the United States, it is really difficult to get new mines built and permitted because there is a lot of environmental opposition and people in general do not like mines in your backyard. - Some companies, however, are focusing on an alternative source of materials. Instead of mining new materials, they are recovering minerals from waste and spent batteries. - In the United States right now we have some lithium, but there is actually no nickel or cobalt and, generally speaking, relative to all the lithium we are going to need, we don't have that much - Ascend Elements is an American startup focused on the production of engineered materials for electric vehicle batteries.

It operates a recycling facility in Georgia and is building a larger one in Kentucky that may cost up to $1.5 billion. The company says it can produce enough cathode precursors and active materials to equip 250,000 electric vehicles a year. Recycling startups are among the most promising U.S. suppliers of battery materials. But they are far from equaling the production of factories in China, the world's largest battery recycler. And they are years away from bringing a significant amount of material to the market. - Recycled materials look exactly like a cathode material made from virgin material, which is mined material.

Send it to an outside lab or whatever, you couldn't distinguish between the two. - Ascend Elements takes used batteries, discharges them and shreds them to recover critical components like lithium, nickel and cobalt, while separating materials like copper, aluminum and plastic. They call the remaining powdery material black mass. Through this process, Ascend says it recycles up to 98% of critical battery materials and does so with a significantly lower carbon footprint than mining and traditional cathode manufacturing methods. It currently focuses on the manufacture of active materials and precursors for nickel-manganese-cobalt cathodes. Recycling may not allow the United States to surpass Chinese production, but it could still be an important part of its domestic supply chain. - The question is not really whether the United States will be able to

catch

up with China.

It will probably never catch up at this point, given how advanced China is, but it will take many years for this to happen. A realistic goal is to simply clean up the US supply chain so that there is some domestic production of all of these critical components. Right now, they are basically at the mercy of China and other countries. It is much more about security of basic supply so that battery shortages do not become a critical point in the energy transition. (brilliant music)