New CPA Policy Paper Warns U.S. Falling Behind in EV Batteries Race

WASHINGTON — The Coalition for a Prosperous America today published a new CPA Policy Paper titled, “U.S. Challenges in EV Battery Production,” that finds the U.S. lags behind the two other major world automotive powers, China and the European Union region, in electric vehicle (EV) battery production. Although U.S. EV battery production is rising, it is not keeping pace with other regions. The CPA policy paper forecasts that in 2025, China will continue to dominate global EV battery production with 56% of global production, while the U.S. will account for just 19%. As the key component of an electric vehicle, leadership in batteries will play an important and possibly decisive role in determining which nations lead the world in EV production.

The 21-page policy paper, written by CPA Economist Amanda Mayoral, recommends that U.S auto companies and the U.S. government take more aggressive action to stimulate the production of batteries within the U.S. It urges U.S. automakers to go beyond battery assembly and invest in innovation, to develop new and more efficient batteries. Additionally, it urges the U.S. government to simplify the regulations around mining of critical minerals to reduce lead times required for mine approvals, and to enable private companies to mine minerals, including lithium, profitably in the U.S. 

“The U.S. is lagging behind China and the European Union in production of lithium-ion batteries for electric vehicles,” said CPA Economist Amanda Mayoral. “Forecasts show the U.S. will fall further behind China by 2025 and remain dependent on imports for more than half of its EV battery needs. While some U.S. companies, like Tesla, have made significant advancements in EV production, it is clear that a more concerted effort by the U.S. government and private companies is needed to meet the growing demand for EV’s, and maintain the U.S. position as a leader in EV production with a large domestic industry. Already, other countries are deploying these strategies, which makes it even more urgent that the U.S. government take action.”

The full policy paper, titled “U.S. Challenges in EV Battery Production,” is available here, and key points are below.

  • The U.S. is lagging in the production of lithium-ion batteries, the most important single component of an electric vehicle (EV). China is the world leader, with 12 times the battery production of the U.S. last year. 
  • According to CPA analysis, by 2025 both China and Europe will continue to be ahead of the U.S. in production of EV batteries. Of the world’s three major advanced economic regions, the U.S. is in third place, and likely to remain there. China will continue to hold its leadership position, and likely account for 56% of global battery production in 2025. 
  • The U.S. government must develop a strategy to stimulate investment in battery production with the aim of the U.S. achieving the capacity to produce the majority of our battery needs within five to ten years. Without such a strategy, the U.S. risks losing control over its EV automotive industry. 
  • Several U.S. companies have ambitious production plans in batteries. However, these focus primarily on assembly of batteries, and ignore the more complex and technologically important challenge of designing and producing battery components. 
  • The relatively poor position of the U.S. industry is due to fragmented U.S. supply chains, under-investment in advanced battery technology and a lack of U.S. government industrial policies to promote R&D and manufacturing in the industry. 
  • The U.S. has limited access to the critical minerals used in battery components. It needs to gain access through a combination of new mining investments in the U.S. and partnerships with friendly nations that have mineral deposits we lack. 
  • Tesla’s model of vertical integration has delivered technological innovation and a market-leading position in EVs in the U.S. and overseas markets. It could serve as a model for other, larger automakers.

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