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Electric vehicles: Biden weighs using the Defense Production Act to produce EV materials

Yahoo Finance Live's Akiko Fujita and Brian Cheung discuss reports that President Biden is considering to use the Defense Production Act to aid in the production of EV materials.

Video Transcript

[MUSIC PLAYING] BRIAN CHEUNG: Some news on the electric vehicle front as reporting suggests that President Biden will invoke the Defense Production Act to ramp up the production of resources that are needed to manufacture electric vehicle batteries-- and this could target minerals like lithium, nickel, cobalt, among others, and give companies the access to funds that could be used to boost production. And Akiko, we know the administration has been messaging its intention to help out American production of these EV batteries. But this could be a pretty dramatic move, would it not? AKIKO FUJITA: Yeah, no question about that. This is part of a larger vision that's been laid out by the Biden administration, number one, accelerating this transition over to cleaner energy, but also securing the resources domestically so the country is not reliant on a country like China. If you take lithium, for example, China controls roughly half of global production. And Brian, you know, what's interesting to me is to see how this type of move is going to affect certain communities. And I'm thinking specifically about a place like Imperial Valley out in California, which, by the way, the president, as well as California Governor Newsom, have described as a "Saudi Arabia of lithium." GM, obviously, has a partnership in place there already. You've got companies like Berkshire out there tapping into geothermal energy. But I was just on a call with the CEO of a company that's likely to be a big beneficiary on the back of this, Controlled Thermal Resources, CEO Rod Colwell telling me that there is enough lithium there to address the entire demand here in the US, this big transition that's happening to EVs, and then be able to ship lithium supply abroad as well. So the White House, obviously, sees a huge opportunity with the resources in place here, but really doing its part to try and accelerate that transition because this is a multi-year transition that we're likely to see play out. BRIAN CHEUNG: Yeah. You know, and at the same time, I mean, you know, this is going to ramp up the resources for American companies to ramp up production. But it does remain an open question, Akiko, as to whether or not they have the capacity to increase production, especially if these are American companies present in other countries where, perhaps, China has a lot of share. And, you know, that kind of calls up a really fascinating daily podcast from-- I think it was about two weeks ago that kind of cast the light on specifically cobalt production in the Democratic Republic of Congo, the DRC, where American companies have actually, essentially, gotten pushed out by Chinese companies that have gotten way more aggressive into pushing into that country. And when it's only one locale, that specific corner of Africa that produces most of the world's cobalt, you do wonder-- OK, yeah, this is great, that the DPA can give some of these mining companies a little bit more firepower. But if they've already lost the foothold in those other countries, has the war already been lost? And I think that that's definitely going to be an open question and one that not just the Biden administration, but other administrations will have to grapple with as well. So we'll see how all of that develops. But let's leave that topic there.