Global Battery Production Challenges and Dynamics

Dec 24, 2024

Lecture on Battery Production and Supply Chain

China's Dominance in Battery Production

  • China produces 4x as many batteries for electric vehicles (EVs) as the rest of the world combined.
  • Dominates the supply chain for battery technology, including:
    • Processing lithium
    • Refining graphite for electrodes
  • Minimal complexity in these processes.

Challenges of Reshoring Industry to the U.S.

  • Complete rebuild needed for:
    • Raw material sourcing
    • Metal separation and refining
    • Product fabrication
    • Quality control
    • Training and hiring engineering teams
  • Requires significant time, money, and resources.

Concerns Over Chinese Monopolies

  • Present in many industries: automobile manufacturing, solar panels, electronics, semiconductors, etc.
  • Challenge for industries in U.S. and Europe to reclaim market share.

International Battery Seminar Insights

  • Held in Orlando to discuss reclaiming supply chains for battery manufacturing.
  • China’s market dominance due to domestic design focus.
  • 70% of battery sales in China.

Investment Needed to Build U.S./European Battery Industry

  • $580 billion needed by end of decade to establish new lithium battery industry:
    • $130 billion for battery materials
    • $50 billion for raw material development
    • $20 billion for midstream processes
  • Large scale up required for raw materials: nickel, lithium, cobalt.

Industrial Competitiveness

  • Raw materials are central.
  • Concerns about competitiveness of companies like Ford and General Motors.

Global Production Projections

  • Panasonic plans to increase production to 200 gigawatt hours by 2030.
  • Global demand projected to be 2.1 terawatt hours by 2033.
  • Chinese company CATL delivered 40 gigawatt hours in Q3 2023.

Opportunity Cost in Economics

  • Definition: Value lost when choosing one option over another.
  • Applied to scarcity of resources: time, money, engineers.
  • China’s advantage in engineering graduates: 7x more than the U.S.

Financial Implications

  • Over half a trillion dollars needed to reshore battery industry.
  • Similar financial needs exist for other industries.

Conclusion

  • Intractable problems for U.S. seem even more daunting for smaller countries like Canada and Sweden.
  • China’s supply chain control is significant, emphasizing the scale of the challenge.

The lecture highlights the critical role that China plays in global battery production and the substantial challenges faced by other nations in reshoring this industry. Emphasis is placed on economic concepts like opportunity cost and the vast investments required to compete with China's established supply chains.