Crosstown Commercial / April 2, 2022
As part of continued efforts to make electric vehicle (EV) charging accessible to all Americans in response to rising gas prices and energy affordability, the Biden administration recently turned to the Defense Production Act (DPA).
The DPA was enacted in 1950 and was created to give President Franklin D. Roosevelt authority to control the domestic economy during World War II. Now, the DPA is being called upon to help expedite the production of critical materials needed for the operation and longevity of electric vehicles.
Per a release from the White House, the DPA will be given authorization to support the production of materials needed for large capacity batteries. In particular, efforts will be ramped up to produce cobalt, graphite, lithium, manganese, and nickel. And, mining companies will be given access to $750 million in federal funding to help ease the effort.
Biden has indicated the need to end the United States’ long-term reliance on China and other countries that have been major players in the space to date. And though the U.S. pioneered much of the methodology leverages to mine and extract domestically, much of those facilities have been surrendered over the years. As it can takes years, if not decades, to create new mines and processing facilities, the U.S. turned to other countries for all production of graphite, manganese, and rare earth ingredients. And, most supply of antimony, cobalt, and vanadium come from outside the U.S.
However, in the case of cobalt, the U.S. has been more subject to price volatility due to production in the Democratic Republic of Congo. This is a serious concern for the Biden administration as cobalt is considered the highest material supply chain risk for electric vehicles (EVs) both in the near term and medium term.
Concerns also linger regarding questionable positions on electric vehicles from Senator Joe Manchin of West Virginia. He has called out the dominance of China in mined materials and has made comparisons to the 1973 – 1974 oil crisis that created supply chain issues for batteries. His position has been of concern as West Virginia has long been known as a mining state for coal, a resource frequently exported globally.
Until the appropriate level of spending can be determined to bring the U.S. supply chain to the right level, this reliance on the DPA will serve as a necessary step in the right direction.