Lecture on Electric Vehicle (EV) Market Dynamics and Battery Production

Ford Motors' Cutback on F-150 Lightning Production

• Date: 2024
• Reason for Cutback: Decreased sales
• Cause: Higher cost compared to gas-powered counterpart

Price of EVs in the US

• Average Price: ~$55,000
• Sales Challenge: High cost is a barrier for consumers
• Climate Goal: Critical to increase EV adoption

Battery Cost and Production

• Battery Cost: ~40% of EV production cost
• Ford's Proposed Battery Plant: Virginia or Michigan
• Technology Source: CATL, a company based in Fujian Province, China
• Issue: Virginia’s Governor halted the proposal due to its Chinese links
• Ford's Defense: Plant is a wholly owned subsidiary of Ford

China’s Dominance in the EV Market

• Global EV Sales: China makes up over half
• Key Component: EV batteries
• Government Support:
  • Facilitation through policies
  • Subsidies to EV companies and consumers
  • Strict standards for batteries
  • Local government contracts for electrifying bus/taxi fleets
• Consumer Adoption:
  • Subsidies and other benefits (e.g., cheaper charging, parking)
  • Distinct license plates for EVs

EV Battery Supply Chain

• Key Components: Cathode (nickel, cobalt, manganese), anode (graphite), electrolyte (lithium salts), separator
• China’s Control:
  • Acquisition of global mineral mining stakes
  • Dominance in mineral refining
  • Manufacturing of battery components and final assembly

Innovations in Battery Technology

• LFP Technology: Lithium iron phosphate
• Advancements:
  • CATL’s LFP battery: 370 miles on 10-minute charge
  • BYD’s Blade Battery: Increased battery density

Global Expansion of Chinese Battery Companies

• New Plants: Germany, Hungary, Michigan (Ford-CATL)

Challenges for the US Battery Industry

• Biden Administration Rule: Max 50% Chinese-sourced components for tax credits
• Qualifying EVs: Only ~20%
• US Investment: Estimated $82 billion to meet domestic demand by 2030

Global Market Considerations

• Dependence on China: For affordable EV transition
• US-China Trade Relations: Ongoing trade war affects EV market dynamics
• Future Prospects: US investing in battery production, but immediate solutions needed
• Environmental and Ethical Concerns: Regarding China's battery supply chain practices