US urged to subsidise electric cars on national security grounds – Financial Times


The US must urgently build up an electric vehicles industry or risk becoming dependent on China for its automotive future, a group of senior military and business leaders have warned.

China is in the process of consolidating control of the supply chain for electrified transport — from mineral extraction and battery production to manufacture and sales of the vehicles themselves — according to the group, Securing America’s Future Energy, which campaigns for US energy security.

Failure by US authorities to counter Chinese dominance within the next five years risks the “withering of the US automobile industry” and the loss of millions jobs supported by the country’s auto sector today, said Admiral Dennis Blair, a former director of national intelligence, who sits on SAFE’s energy security leadership council.

“It would be reduced to a small share of the market, producing electric vehicles that are not as advanced and as attractive as those produced by China and by Chinese subsidiaries, and a loss of jobs, industrial depth and technological skill,” he said.

China has come to play a leading role in the development of EVs. The US trails it in the extraction of minerals such as lithium, graphite and rare earths, as well as the production of lithium-ion batteries and finished EVs. There were 1.2m EVs sold in China last year, compared to 320,000 in the US, according to McKinsey.

“They not only have more electric vehicles purchased in their market, they have more companies, they build more batteries, they have gone around the world for rare earths and other metals that go into these vehicles and locked up or gained preferred access to many of them,” Admiral Blair said. “So they have a jump on the direction that the electrical vehicle industry is going.”

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According to Simon Moores of Benchmark Mineral Intelligence, China produced 72 per cent of the world’s lithium-ion batteries in 2019, while the US accounted for just 9 per cent. He warned in May that the US was falling further behind, as China is building one battery factory a week, while the US builds one every four months.

China “has not just built an entire suite of supersized battery megafactories for its auto industry, but the supply chain to feed them”, he said. “China produces only 23 per cent of key battery raw materials combined. Yet it produced 80 per cent of the next step in the chain — battery chemicals — and 66 per cent of cathodes, 82 per cent of anodes and 72 per cent of battery cells.”

Still, the US may have a considerable edge over other carmakers in the form of Tesla, the world’s largest carmaker by value. But even Tesla head Elon Musk has expressed worry about a shortfall in raw materials needed to realise his ambitions.

SAFE — whose leadership council comprises executives from several large US companies, including Royal Caribbean Cruises, FedEx and L-3 Communications — wants the US to revive and expand federal incentives to buy EVs and develop a supply chain for minerals that avoids China, as well as allowing US companies to work together to counter China’s ascendancy.

The warning comes weeks ahead of the US presidential election. Joe Biden, the Democratic contender, has thrown his weight behind the expansion of the US electric vehicle market, promising to deploy half a million new public charging outlets by the end of 2030 and restore tax credits.

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President Donald Trump has cautioned companies against large-scale production of EVs and expressed doubts over the range such cars can travel.

On Wednesday, when California said it would to ban the sale of fossil fuel-powered cars from 2035, the Trump administration called the state’s move “alarming”.

But SAFE argued the issue should be treated with equal importance by both major US political parties.

“Long-term progress really depends on a bipartisan approach to these things that will survive the swings,” Admiral Blair said.

He said it should be treated “as a national security issue, which is bipartisan”.

Additional reporting by Patrick McGee in San Francisco



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