Electric vehicles (EVs) have long been viewed as an enduring demand-side solution to U.S. oil dependence. Yet for this enhanced energy security to be realized, the United State must ensure it does not cede control of the vital EV battery supply chain, and the strategic minerals that feed it. The race to secure this supply chain, as transportation worldwide moves toward an electrified and digitized future, has taken on a greater urgency as China has raced ahead in this area.
The outcome of this competition has profound consequences for U.S. economic and national security. As the world’s largest oil consumer, accounting for one-fifth of daily global supply, American oil dependence exposes consumers and businesses to oil price volatility, engineered—either wholly or in part—by the OPEC cartel. Despite U.S. production reaching new highs, OPEC still holds 83 percent of the world’s oil reserves; this figure rises to 90 percent when OPEC+ petrostate allies like Russia are factored in. If China controlled the battery supply chain too, then the United States risks merely swapping one dependence for another.
Warnings about the United States’ faltering progress on this front are beginning to reach Washington. In testimony to the U.S. Senate in February, Simon Moores, the managing director of Benchmark Mineral Intelligence, said, “We are in the midst of a global battery arms race, in which so far the U.S. is a bystander.” This warning was repeated at an event held by Benchmark last week, which outlined the scale of the problem: China produces nearly two-thirds of the world’s lithium-ion batteries, whereas the United States produces just 5 percent.
Speaking at the event, SAFE President and CEO Robbie Diamond told the audience the United States “should not go from dependence on oil from the Middle East for transportation, to dependence on China for electric vehicles and batteries.” In a separate statement, he added, “If we are to maintain pace with China and not cede the commanding heights of the global economy, we must develop our domestic mineral resource base to the highest standards and other components of the battery supply chain all the way to the consumer.”
The issue is gathering Congressional attention. At last week’s Benchmark conference, Senator Lisa Murkowski announced her plans to introduce the American Mineral Security Act. If enacted, the bill would update the list of critical minerals every three years, prioritize workforce development, and provide greater predictability for the permitting process with the aim of developing U.S. minerals resources. “Our challenge is still a failure to understand the vulnerability we are in as a nation when it comes to reliance on others for our minerals,” Murkowski said. The bill is being cosponsored by, among others, Sen. Joe Manchin.
While both China and the United States have invested in lithium mining projects in Chile, Argentina and Australia, China has increased domestic production—producing almost eight times more lithium domestically than the United States, which produces just 1.2 percent of the world’s supply. “You can’t build half a million electric vehicle battery packs without a secure supply of several critical raw materials,” Chris Berry, a battery-metals analyst at House Mountain Partners, told Bloomberg. “If the U.S. lags in the build out of lithium or cathode capacity, its supply chain dynamism and competitiveness around the new energy theme is put at risk.”
If EVs are to provide the United States with optimal economic and national security, American efforts to capture a greater share of the battery supply chain must be increased. From developing the U.S. mineral resource base to gaining a greater share of battery production, the United States cannot afford to be a bystander in the global battery arms race.
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