Automotive News Europe — 2022-11-22
Automotive Industry
The US and Europe could cut their dependence on China for electric vehicle batteries through more than $160bn of new capital spending by 2030, the Financial Times said, citing a Goldman Sachs report.
China's dominance could be unwound by protectionist policies in the US and Europe, along with alternative battery chemistries that require fewer critical minerals from China, and the rise of battery recycling.
The Goldman Sachs report calculated that to achieve a self-sufficient supply chain, countries competing with China would need to spend $78.2bn on batteries, $60.4bn on components and $13.5bn on mining of lithium, nickel and cobalt, as well as $12.1bn on refining of those materials, the FT said.
In the US, the Inflation Reduction Act will give a boost to EV manufacturing. The law, signed 16 August by President Joe Biden, includes provisions aimed at boosting US manufacturing of electric vehicles and batteries, including new sourcing requirements for vehicles to qualify for EV tax credits.
The investment bank's analysts believe demand for finished batteries could be met without China within the next three to five years, as a result of investments in the US by South Korean conglomerates LG and SK Hynix.
Goldman forecast that the US market share of the Korean battery makers would soar to about 55% in three years, from 11% in 2021.
For now, China dominates battery production, including the mining and refining of raw materials.
Goldman Sachs did not immediately respond to a Reuters request for comment.