The Biden administration reckons that the new measures were
\nnecessary to prevent mainland Chinese companies from flooding the
\nUS market with cheaper EVs and batteries, which would make it
\ndifficult for American companies to compete. According to a
\nstatement released by the White House, the current US government
\nhas attracted billions of dollars of investments for the
\ndevelopment of a reliable EV supply chain, including batteries and
\ncritical mineral, through tax credits under policies such as the
\nInflation Reduction Act (IRA) and the Bipartisan Infrastructure Law
\n(BIL). The White House implied that the latest increase in tariffs
\nwould ensure those investments are protected and can continue as
\nplanned.<\/p>\n
Currently, the US gets most of its lithium-ion batteries from
\nChina, but only a small portion of these batteries are for use in
\nEVs. According to S&P Global Mobility's high-voltage battery
\nforecast, in 2024, based on GWh, about 62% of the lithium-ion
\nbattery demand for EVs produced in the US will be met from plants
\nin the US. South Korea and Japan will account for approximately 8%
\nand 7%, respectively. Interestingly, around 20% of the overall
\ndemand in the US will be sourced from plants in mainland China.<\/p>\n
The current share of mainland China could grow significantly in
\nthe future if EV companies in the US find importing from mainland
\nChina as a much cheaper option than manufacturing or sourcing
\nbatteries locally in the US, discouraging manufacturing of the
\ncomponent in the US.<\/p>\n
![\"\"](\"https:\/\/cdn.ihsmarkit.com\/www\/images\/0524\/lithium-ion-b_300520240837276.jpg\")
<\/p>\n
Actions, reactions and The latest change in tariff rates has come almost five months According to Ali Adim, senior analyst at S&P Global Adim added, “Some American OEMs, like GM and Ford, are exploring Rome was not built in a day<\/strong><\/p>\n With the local content requirements under the IRA and the latest Hugo Enrique Cruz, senior analyst at S&P Global Mobility, Get daily insights and \u7acb\u523b\u8a3b\u518a\u53ca\u5831\u540d\u96fb\u8166\u88dc\u7fd2\u8ab2\u7a0b\u5427! <\/a> www.ITSec.vip<\/a> www.Sraa.com.hk<\/a>
\nimplica<\/strong>tions<\/strong><\/p>\n
\nafter the US administration had recognized mainland China as a
\nforeign entity of concern (FEOC) to discourage EV companies from
\nsourcing batteries and raw materials from China-based suppliers.
\nEarlier in December 2023, mainland China had imposed an export
\ncontrol measure on graphite, a critical raw material used in
\nbatteries. The move to contain graphite exports was widely seen as
\na countermeasure to respond to the US' export restriction for AI
\nchips and semiconductor manufacturing equipment to mainland
\nChina.<\/p>\n
\nMobility, “The import tariffs aim to protect the North American
\nbattery supply chain from cheaper Chinese products, thereby
\nlevelling the playing field for the growing domestic industry.
\nHowever, these tariffs may also hinder access to technologies such
\nas lithium iron phosphate (LFP), which offers a significant cost
\nadvantage over nickel-based chemistries and is predominantly
\nproduced in China. Additionally, the IRA disqualifies vehicles with
\nChinese batteries from tax credits, creating another barrier to
\nadopting LFP technology.<\/p>\n
\ndomestic LFP production through licensing agreements with Chinese
\nsuppliers such as CATL. However, the cost benefits of local
\nproduction are uncertain due to the lack of an upstream supply
\nchain in North America.”<\/p>\n
\ntariff hikes, the US has dealt a double blow to lithium-ion battery
\nimports from mainland China, but it still relies on mainland China
\ndirectly and indirectly for a range of minerals, including cobalt,
\ngraphite and lithium. Mainland China continues to dominate the EV
\nsupply chain with more than 80% control on certain segments of the
\nsupply chain, including mining and processing of critical minerals.
\nThe US government has made progress on onshoring EV component
\nmanufacturing, but it takes time for efficient supply chains to
\nform and any retaliatory measure from mainland China like
\nreciprocal tariffs or export restrictions on critical materials
\ncould impact the US EV industry in the short term.<\/p>\n
\nsaid, “When comparing the costs of raw materials and operational
\nexpenses, it is found that the average price of high-energy NCM
\nlithium battery cells produced in the USA could be 30% higher than
\nthe cost-effective LFP batteries manufactured in China. Chinese
\nmanufacturers enjoy economies of scale in their factories and have
\na more integrated supply chain within the country. On the other
\nhand, battery manufacturers in the US face higher costs due to
\nincreased energy, labor and permitting expenses compared to their
\nAsian counterparts.”<\/p>\n
\nintelligence by subscribing to AutoTechInsight.<\/strong><\/a><\/p>\n\nCommercials Cooperation Advertisements:<\/b><\/h2>\r\n
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