Why China dominates the world’s EV supply chain
After a rare visit by U.S. Secretary of State Antony Blinken to Beijing this week, Reuters is reporting that a group of lawmakers are meeting with American car companies to urge them to lessen their reliance on Chinese electric vehicle parts — especially batteries.
Even with significant U.S. investment in EV battery production through the Inflation Reduction Act, China’s control of the world’s battery supply chain is unlikely to change anytime soon.
When it comes to the EV battery supply chain, “China has a 10- to 15-year head start on the rest of the world,” said analyst Chris Berry with House Mountain Partners.
China has invested in lithium and other battery minerals, he said — especially “the refining of the material. And then the cell and the pack production. The battery production as well.”
That investment has paid off, said Scott Kennedy with the Center for Strategic and International Studies. “China accounts for somewhere between, you know, 50% to 60% of the global EV market.”
China will stay ahead, even as the U.S. and Europe invest in EVs, said analyst Sam Adham of CRU.
Take global lithium refining, for example. Capacity will roughly triple by 2030, yet “Chinese ownership of those refining projects at the moment is around 67%, and by 2030, it’s around the same,” he said.
To build its refining capacity, the U.S. will have to cite, permit and develop infrastructure. That’s harder to do, said Morgan Bazilian of the Colorado School of Mines.
“Communities … typically don’t want them in their backyard. That’s the reason we have the acronym NIMBY.”
But to compete with China, this infrastructure will have to be in someone’s backyard. This will likely be a regional effort, said Robert Handfield of North Carolina State University.
“Mexico has low-cost labor. Canada has a lot of natural resources, including, you know, lithium and copper and other minerals,” he said. “And the U.S. has a lot of capital to invest in.”
Handfield calls those three countries a powerful force, but they’re not going to be able to do it alone. Making electric vehicles will still require a global supply chain.
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