Hopefully, reshoring supply will mean lower costs. It will certainly lessen the industry’s dependence on China for supply of key EV parts.
Friday, The Wall Street Journal reported that
(6752. Japan) was looking to put a new EV battery factory in Oklahoma. In July,
announced a new battery facility destined for Kansas that would create up to 4,000 jobs.
“We have not made any decisions,” said a
spokesperson when asked about the report. “We are always exploring growth opportunities and evaluating ways to invest both domestically, and internationally.”
Panasonic stock closed up 0.4% in overseas trading Friday. The
had a rough day after hawkish comments from Federal Reserve Chairman Jerome Powell.
Panasonic already has some North American battery capacity. It helped
(TSLA) build its battery factory in Nevada. The Japanese conglomerate has roughly 50 gigawatt hours of annual battery-making capacity. That is enough batteries to power roughly 700,000 EVs.
Most batteries come out of China.
Contemporary Amperex Technology Co. Ltd.
(300750. China), better know as CATL, is the world’s largest battery maker and ended 2021 with more than three times the capacity of Panasonic. What’s more, CATL first half 2022 sales came in at more than $17 billion, up 155% year over year.
The world has relied on China to supply the most EV materials for years. Part of the reason China became EV-dominant was because more EVs have been sold there. EV penetration of new car sales has run north of 25% in recent months, about three times the rate in the US
Another reason: China has become the world’s factory by making it easy to build plants and offering a supply of cheap labor. China manufactures about 30% of the world’s goods, according to World Bank data, up from less than 10% at the turn of the century.
Battery investments by the likes of Panasonic and others are slowly changing that math.
For EV, batteries are only part of the solution though. There are other parts of the supply chain to consider. Most battery materials are still processed in China. For now, any EV material sourced in the US essentially goes to China for processing before being shipped back, explains
5E Advanced Materials
(FEAM) former President Anthony Hall. (He still works with the company.)
5E Advanced is working on a boron project in California. Boron has many uses, including agricultural applications. Boric acid can be part of a battery, functioning as an electrolyte material. An electrolyte facilitates the flow of electrons between positive to negative battery terminals.
Boron is used more today for the permanent magnets in electric motors. Once again, China processes most of the material and makes most of the magnets.
Right now, American company
) mines rare-earth minerals and ships them to China. Eventually, MP wants to make its own magnets. At that point, 5E plans to supply boron, another component in magnets, to MP.
Panasonic, 5E and MP are all examples of how the EV supply chain is tilting back toward the US The changes will yield logistics savings. Materials won’t be crossing the world multiple times. Time will tell if materials and batteries will be produced at a cost that can match China.
Even if that doesn’t happen, US auto makers should feel better about relying less on China for critical parts.
Write to Al Root at [email protected]