Contributed Commentary by John DeMaio, Graphex Technologies
May 10, 2022 | While wide adoption of electric vehicles (EVs) may have seemed like a distant reality merely a decade ago, trends throughout the past year have demonstrated that the EV future is no longer just rapidly approaching—it has arrived. Global sales of EVs are projected to surpass 10.5 million this year, around 4 million more than 2021 sales. As of Q1 2022, in fact, the only automaker brands to report sales gains were all-electric. To meet the increased demand posed by consumers, plans continue to be rolled out by traditional automakers to amplify production. For example, General Motors earlier this year announced an investment of $6 billion in Michigan through 2024 to expand EV production capacity.
In order to support increases in vehicle production, many automakers have accordingly begun to localize production of battery cells. According to the Department of Energy, thirteen new battery cell gigafactories are planned to come online in the US within the next three years, allowing automakers to better avoid supply chain disruptions and lower costs. While these factories will be imperative to automakers as they move to domesticate EV battery supply chains, one significant obstacle still hinders the greater transition. Across the industry, we must relieve reliance on foreign manufacturing of the very minerals that constitute EV batteries and feed these gigafactories in order to progress towards a net-zero future.
Mentioned recently in an announcement from the White House, the U.S. is largely dependent on foreign sources for many processed versions of critical minerals used in batteries, and is strongly supportive of efforts to localize midstream supply. As we become increasingly dependent on the critical minerals that supply not only electric vehicles but other technologies, our supply chain becomes increasingly more vulnerable to the vicissitudes of international politics and the volatility of other nations.
One critical mineral in particular that serves as a compelling example is graphite. Natural graphite must be first mined at its source and then processed into a specialized form for use as anode material for EV batteries. Currently, graphite is predominantly either sourced from China and/or at least partly processed in China. As of 2021, natural graphite is not produced in the United States, however, U.S. firms consumed an estimated $21 million of graphite in 2020, and nearly doubled that in 2021 to $41 million. While demand intensifies, policymakers continue to commit to energy independence, with President Biden last month invoking the Defense Production Act to ramp up the domestic production of graphite and other key minerals used in batteries in the face of growing international tensions. Although these minerals may continue to be mined internationally, movement to diversify upstream sources and create more local mid-stream processing will undoubtedly promote a more robust market.
While it’s important to note that establishing supply chains will not happen overnight, current outlooks seem promising. The U.S. Department of Energy’s Loan Programs Office wants to advance President Joe Biden’s decarbonization goals by backing critical mineral technologies. The DOE has expanded its criteria under the program to back critical mineral processing projects in a bid to increase the country’s domestic supply of battery materials. The loans office has received more applications than at any time over the last 10 years and is processing 77 applications totaling $75.9 billion in financing requests.
Funds from President Biden’s $550 billion bipartisan infrastructure law, which allocates $2.91 billion to boost the EV battery supply chain, will soon become available to battery material manufacturers. This funding will boost current work to expedite battery manufacturing projects and processing. Additionally, automakers are continuing to announce partnerships with battery processors to increase product development and production capacity; General Motors recently announced plans to build a processing facility for lithium, another key battery material, through a joint venture. With both legislative pushes and industry incentives by city, county, state, and federal governments, companies can continue to work toward fulfilling the demand established by consumers and echoed by the White House.
Despite the EV battery technological knowhow originating overseas, it is time for production processes to be brought to America and support local economies. In addition to benefiting the EV supply chain, the localization of battery mineral plants can boost local economies and create high-quality jobs for both skilled and unskilled workers. One report, in fact, states that jobs in the U.S. auto sector could rise by over 150,000 jobs in 2030 with increased production and sales in the EV industry.
As articulated by Elon Musk, the growth of the EV market greatly depends on “equipment capacity, operational efficiency and the capacity and stability of the supply chain.” Therefore, the faster the sourcing and processing of critical minerals moves stateside, the faster pent-up demand can be answered. With supportive policy and continued effort by automakers, a more stable domestic market can be realized.
John DeMaio is President of the Graphene Division of Graphex Group and CEO of Graphex Technologies, the U.S. subsidiary of Graphex Group, a global supplier of graphite. John has over 35 years of experience in executive leadership and operational management in the energy and infrastructure sectors. Graphex is focused on the development of technologies and products for the enhancement of renewable energy, particularly the enrichment of spherical graphite and graphene, key components used in lithium-ion batteries for EVs, renewable energy storage, and other use cases. He can be reached at john.demaio@graphexgroup.com.
