Western Nations Struggle For EV Materials

Much like Ron Burgundy leaping to save his “sweet chinchilla”, one can draw parallels with countries that jumped into action to drive up EV demand without first ironing out exactly how they’re going to supply them all. Now in the bear pit, Ron has no plan and Western countries have all but one supplier.

Background: There has been a resounding push across Western nations, specifically in the US, UK, and EU this week to get serious about diversifying away from China and reduce reliance on its EV products.

• Governments seem to have figured out the policies needed to ensure EV demand grows but are falling short on the logistics of supply.

The main issue: China controls more of the EV supply chain than Western countries feel comfortable with. One need only look at the war in Ukraine and the ensuing energy crisis to see the downsides of being too reliant on resources from a single country.

The State of the Nation(s)

The US has formed a bipartisan group of lawmakers to work with Ford and GM to “strengthen American competitiveness and establish EV supply chains in the US.”

• Yep, you guessed it, the Inflation Reduction Act is in play to help the transition by supplying tax credits for North American-assembled vehicles.

Things aren’t looking as diverse across the pond in the EU and UK. A recent report by the European Court of Auditors warned the current state of EV supply chains in the EU make it likely to fail in reaching its 2035 goals without mass vehicle imports.

• The UK looks to be even worse off and maybe even going backwards. UK Business Secretary Kemi Badenoch recently issued a warning in response to an EV deal being finalized with China.

Zoom out: China currently accounts for 76 percent of global battery production, which is a far greater hold on the market than Russia had previously with natural gas over the EU. While the need for EVs is slower to be felt than running out of gas in the winter, it’s still a big need for countries to push forward on their climate goals.

For the supply chain of EVs, particularly critical minerals like cobalt from the Democratic Republic of Congo, passing through China is problematic from an ethical and security standpoint. Countries will need to decide whether to take on greater energy security risk and moral liability to meet their climate goals or delay them by ethically sourcing more robust supply chains.

+Bonus infographic: Components of an EV Battery

++ Additional reading: Cobalt Red: How the Blood of the Congo Powers Our Lives