There are three major players in the global race to secure the electric vehicle (EV) supply chain: China and the US, followed by the EU. According to data from Energy Monitor’s parent company, GlobalData, the US is fast catching up with China when it comes to announcing new projects for the development of lithium-ion (Li-ion) batteries.
While China currently dominates global EV production, in April this year, the Biden administration announced ambitious new vehicle emissions standards that are expected to result in a surge in the number of all-electric cars sold in the US – as well as demand for Li-ion batteries.
China and the US have scores of projects in the pipeline (meaning projects that are either at exploration, pre-feasibility or feasibility stage, as well as projects already under construction) with the total value of planned projects totalling $127.9bn (933.3bn yuan) in China and $107.3bn in the US, according to a recent analysis from GlobalData. EU countries have a combined $83bn invested in planned projects.
The US has become a major player in the global race to secure the EV supply chain since the passage of Joe Biden’s Inflation Reduction Act (IRA), which requires 80% of the market value of critical minerals used in EV battery production to be sourced from within the US.
According to GlobalData, the vast majority (72%) of investment in IRA-linked projects has gone towards developing Li-ion batteries.
Total battery manufacturing construction projects in North, Central and South America, are currently worth $117.9bn, with the majority (50.2%) of projects by value still in the planning stage. “Assuming all projects proceed as planned, and that spending is evenly distributed over the construction phase, total spending will jump to $28.8bn in 2024, from $16.3bn in 2023 and just $7.1bn in 2022,” GlobalData finds. It notes that the private sector funds 84% of battery construction projects in the region.
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Energy Monitor’s analysis also reveals that the top ten US states by value of IRA-linked Li-ion battery projects are located in either Republican states or ‘swing’ states, in what has come to be known as the ‘battery belt’.
This aligns with a recent analysis by the Financial Times (FT), which shows that more than 80% of investment in large-scale clean energy and semiconductor manufacturing pledged since the passage of the IRA and the CHIPS and Science Act is due to be spent in Republican congressional districts.
According to the FT, this presents a “growing conundrum” for Republican lawmakers who have positioned themselves against federal investment in clean energy.