For U.S. Companies, the Race for the New EV Battery Is On - Yale E360

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The passage of two new federal laws, the 2022 Inflation Reduction Act (IRA) and the 2021 Infrastructure Investment and Jobs Act, is expected to move the industry along. The U.S. has offered a $7,500 tax credit to buyers of most new EVs since the end of 2009; but starting in 2023, the IRA ties that tax credit to certain requirements for sourcing of critical minerals and manufacturing of batteries. By 2029, only EVs with 80 percent of their minerals sourced within the U.S. or its allied nations and 100 percent North American-manufactured or -assembled components will qualify for the full credit.

Taken together, the bills stand to transform the electric vehicle battery industry and force innovation, much as the American Recovery and Reinvestment Act did in the 2010s, when Tesla secured a $465 million federal loan to complete development of its Modern S sedan and open its plant in Fremont, California. If cobalt and nickel are hard to get, Prochazka says, then “let’s make batteries that use less cobalt, or no cobalt. Or let’s make batteries that use less nickel.” China refines nearly all of the minerals used by battery makers, Prochazka adds, “so now we’ll have processing facilities in the U.S.” Last month, Nevada-based Panasonic Energy announced that in 2025 it would start making EV batteries from nickel recycled in that state.

Michael Maten, GM’s senior strategist for EV and energy policy says the change was coming whether Congress acted or not. In 2021, when GM CEO Mary Barra committed to go 100 percent electric by 2035, Maten says, “The first thing we said was, ‘Oh man, we’re going to need a lot of batteries.’” That led to taking a hard look at the supply chain and making “a concerted effort to onshore or nearshore that supply chain to make sure it’s sustainable.” Now, he says, “just about every month we bring on another partner to secure” critical minerals.