[ad_1]
The US and Europe can reduce their dependence on China for electric vehicle batteries through more than $160 billion in new capital spending by 2030, Goldman Sachs predicts.
EV batteries are one of the key technologies causing concern in Western capitals over dependence on China. After years of deep state support and Beijing’s desire to reduce its reliance on oil imports, China produces three-quarters of the world’s batteries and also dominates the production of their materials and components.
However, according to a report to clients seen by the Financial Times, analysts at the investment bank believe a sharp turn towards protectionism in Washington and Brussels, combined with unprecedented spending by non-Chinese companies, has the potential to wean the West off its reliance on Beijing over the next seven years. .
To have a self-sufficient supply chain, countries competing with China would have to spend $78.2 billion on batteries, $60.4 billion on components, and $13.5 billion on lithium, nickel, and cobalt mining, as well as 12, 1 billion dollars on the processing of those materials, the report calculated.
Analysts at the bank believe demand for finished batteries could be met without China in the next three to five years, largely thanks to heavy investments in the US by South Korean conglomerates LG and SK, which have attracted huge subsidies from US taxpayers.
LG Chem said Tuesday it will invest more than $3 billion to build a battery cathode plant in Tennessee, the largest of its kind in the US. Goldman predicts that Korean battery makers’ market share in the U.S. will rise to about 55 percent in three years, from 11 percent in 2021.
The passage of the Inflation Reduction Act in August means huge tax breaks and other subsidies to localize battery supply chains and encourage electric vehicle adoption. Goldman expects the “average eligible US EV” to receive more than $10,000 in IRA benefits.
Ross Gregory, a partner at electric vehicle consultancy New Electric Partners, said that despite the IRA’s move and recent surge in gigafactory investment, Goldman’s cost estimate appeared too low, the timeline was optimistic and expectations for the impact of battery recycling were unrealistic. .
“There is some momentum, but there is still not a strong willingness for anyone other than the Chinese players to invest upstream.” For example, there has not been a significant Australian greenfield battery mining project developed at all with any major foreign investment,” he said, adding: “The likely growth of EV infrastructure in China over that period will be so huge that it will still outpace Europe and the USA.”
Reducing China’s dominance in battery materials and components is also seen as a challenge. The share of the Chinese group in the global market of capacity for the production of anodes is 87 percent, precursors 85 percent and cathodes 77 percent.
Goldman analysts said the dominance could be undone by protectionist policies in Europe and the US, along with alternative battery chemistries that require fewer critical minerals from China, and an increase in battery recycling that would reduce demand for lithium and nickel.
More companies outside of China are developing sodium-ion batteries — an alternative to lithium-based batteries — as well as LFP, a type of cathode that does not use nickel and cobalt, Goldman said.
Still, the underlying economics of EV battery production in the west is a fundamental barrier to breaking away from China.
“We note that the capital cost per unit implied by the company’s recent announcements in the US is 78 percent higher than in China.” . . recent labor shortages and wage inflation would also make US battery production more expensive,” the analysts noted.
Environmental risk is also an unresolved challenge for the EV supply chain outside of China. Until now, the world has been happy to rely on China not only for the extraction of minerals, but also for the processing of materials that include highly toxic chemicals and their waste.
[ad_2]
Source link
