U.S. Is Losing the Battery Race Despite Having the Right Stuff
Source: Bloomberg Businessweek

U.S. Is Losing the Battery Race Despite Having the Right Stuff

The U.S. isn’t just losing the battery race—it’s barely in the running. But it doesn’t have to be that way.

China dominates lithium-ion battery production and is building factories at breakneck speed. Europe, too, is adding battery plants as its power grid and car companies shift away from fossil fuels. Although a few factories are planned in the U.S., including Tesla Inc.’s Texas plant, BloombergNEF currently expects the country’s share of worldwide battery production to fall from 8% today to 6% in 2025.

Yet the U.S. has most of the ingredients it needs for a battery-building industry. It has the raw materials, with three companies developing facilities to extract lithium from subsurface brine in the Southern California desert, while similar projects are under way in Arkansas and Nevada. It also has the demand. Utilities are plugging big batteries into the electric grid to store renewable power and protect against blackouts. And U.S. automakers are ramping up production of EVs.

The government pushed for domestic battery factories once before, under President Obama. But demand for the devices wasn’t high enough to support the factories, leading to embarrassing failures such as the 2012 bankruptcy of manufacturer A123 Systems after it received a $249 million federal grant. That’s changed.

U.S. Is Losing the Battery Race Despite Having the Right Stuff

“If we want to have a domestic supply chain for batteries in North America, now is the time you have to press the accelerator,” says Sam Jaffe, managing director of Cairn Energy Research Advisors, a consulting company in Boulder, Colo. “The conversation should be ‘mine to car,’ not just ‘battery to car.’ ”

It’s not a question of national bragging rights. Lithium-ion batteries have become a foundational technology of 21st century life, so critical that the federal government in 2018 put lithium on a list of 35 minerals essential to national security.

“It seems insane that the largest economy in the world should not be a participant in this,” says Danny Kennedy, chief energy officer of New Energy Nexus, a cleantech nonprofit that recently issued a report on the possibility of creating a domestic battery industry. “We could be the champion of that future if we engage in it now and don’t give it away.”

U.S. Is Losing the Battery Race Despite Having the Right Stuff

For U.S. automakers, there’s good reason to want batteries built here. In an era of trade turmoil, relying on imported batteries could be problematic, even if President Biden abandons his predecessor’s use of tariffs. And with car companies worldwide shifting to electrics, Detroit will need an ample supply to keep car prices low.

Plus, EV battery packs are big and heavy, making them expensive to ship. The pack for a compact Chevrolet Bolt, for example, weighs about 950 pounds. U.S. battery factories feeding U.S. auto plants could reduce those costs. “Think about shipping a couple million battery packs from Asia—it’s a nightmare,” says Brett Smith, director of technology for the Center for Automotive Research. “It just becomes more logistically reasonable to build it here.”

In addition to a General Motors-LG Chem battery plant under construction in Ohio and SK Innovation’s two upcoming Georgia factories, the U.S. has plenty of startups nearing production. Solid Power Inc., a battery manufacturer in Colorado, expects to support vehicle production as early as late 2025. Chief Executive Officer Doug Campbell says the country has a demonstrated ability to innovate. “The risk, though, that we face is: Can we keep those innovations at home?” he asks. “Is it going to go the way that the solar cell went?”

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