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Biden administration announces $3.1 billion for America’s battery shortage

·Washington Correspondent
·5 min read
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The White House announced $3.16 billion is on the way to help with the battery shortage in America.

The money, which will come from funds in the recently enacted Bipartisan Infrastructure Law, was announced by the White House and the Department of Energy on Monday. Officials promise the money will help domestic manufacturers make more batteries in the U.S., iron out supply chain issues for components, and also mitigate some of the environmental impacts from battery manufacturing.

"We need a lot of batteries and we want American workers making those batteries right here in America," said White House National Climate Adviser Gina McCarthy in announcing the news alongside her colleagues.

The effort is part of a broader push to encourage American independence when it comes to the precious minerals that fuel much of modern life but come from places like Russia and Ukraine as well as China.

An employee works on the production line of electric vehicle (EV) battery manufacturer Octillion in Hefei, Anhui province, China March 30, 2021. Picture taken March 30, 2021. REUTERS/Aly Song
The production line of electric vehicle (EV) battery manufacturer in China. The nation has been dominant in worldwide battery manufacturing. (REUTERS/Aly Song)

The money will be made available in the form of grants to companies looking to build plants in the U.S. to process the raw components of batteries into finished products. Officials note the funds will require a match from the recipient company, and the minimum grant will be $50 million. That means the new plants will cost, at a minimum, $100 million each.

In an appearance on Yahoo Finance, a senior Department of Energy official highlighted various provisions in the bill, including recycling efforts. David Howell, who is Acting Director at the agency's Office of Manufacturing and Energy Supply Chains, noted the the recycling efforts would reclaim material from the spent batteries for reuse to hopefully "in the future, have more of a circular economy for electric vehicles and electric vehicle batteries."

‘For electric vehicles, it's all about the battery’

Industry players have long noted that batteries are key to EV manufacturing.

General Motors CEO Mary Barra told Yahoo Finance Monday that "for electric vehicles, it's all about the battery" as she outlined her company’s plans to take control up and down the manufacturing process. Nissan COO Ashwani Gupta added in another Yahoo Finance interview recently that “battery technology is the main differentiator” in the auto industry.

During Monday’s conversation, Barra also discussed plans to launch multiple new American plants for battery manufacturing, which will presumably be able to take advantage of these some of these funds from Washington, DC to get them off the ground.

“We decided we wanted to have control over battery cell manufacture,” she said of the efforts, adding that some new plants are already coming online and others will be finished in the years ahead.

General Motors CEO Mary Barra speaks during a meeting with US President Joe Biden (R) speaks and other private sector CEOs in the State Dining Room of the White House in Washington, DC, on January 26, 2022. - Biden discussed the ways his Build Back Better agenda will grow the economy. (Photo by Nicholas Kamm / AFP) (Photo by NICHOLAS KAMM/AFP via Getty Images)
General Motors CEO Mary Barra with President Joe Biden and other private sector CEOs at the White House in January. (NICHOLAS KAMM/AFP via Getty Images)

“This funding announcement will punch above its weight in not only accelerating a transition to a clean transportation future, but also in securing one of the most important supply chains in the U.S. economy,” Brian Deese, the Director of Biden’s National Economic Council, said during Monday’s announcement.

Deese added that President Joe Biden has prioritized the battery supply chain as key for the nation’s economy and security. The Bipartisan Infrastructure Law has more than $7 billion in total directed towards the U.S. battery supply chain, with initiatives like recycling critical minerals for domestic manufacturing. There are billions more set aside for things like EV charging stations and electric buses.

Biden has set a goal of having half of the cars sold in the United States by 2030 be electric; those cars will need to be powered by a massive increase in battery production.

‘Help to underwrite the private investment we need’

The batteries run on components that are at a premium include lithium, nickel, cobalt, graphite, and manganese. EV makers like Tesla (TSLA) have recently had to scramble to source nickel and Rivian (RIVN) has warned of supply chain woes.

The White House has deemed EV battery production to be in the interest of national defense and even invoked the Defense Production Act recently. The invocation of the Act — which allows the president to require businesses to take actions deemed necessary for national defense — allows the White House to force the building up of domestic production capability in these key materials. In other words, it paves the way for more mining.

Wednesday’s announcement is focused on lithium-ion batteries and is not intended to spur further mining or production of the raw materials, officials say. Rather, it will give companies more tools to process the existing supply.

The administration says the money will help companies process the materials needed to make lithium-ion batteries — such as lithium, cobalt, nickel, and graphite — and help mitigate supply chain disruptions in the years ahead.

The money announced Monday “will help to underwrite the private investment we need in the United States to build a reliable industrial capacity,” said Deese.

Russia supplies about 20% of the world’s nickel, and both Russia and Ukraine are central to global supply chains of other precious metals. China dominates lithium production. Biden called efforts to secure battery components critical to “end our long-term reliance on China and other countries for inputs that will power the future.”

Industry players have said the U.S. is behind China when it comes to both the mining and processing these key minerals. National Mining Association President and CEO Rich Nolan recently told Yahoo Finance that it's important to catch up to avoid “trading one concern of geo-petro politics for another related to metals mining and metals processing for the things we need for everyday life.”

This story has been updated with additional context.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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