We need to make electric vehicle batteries in the U.S.

OPINION:

It didn’t gain much attention in the United States, but BYD, China’s top electric vehicle manufacturer, recently overtook Tesla to become the world’s leading maker of electric cars.

BYD’s revenue increased by 72%, gross profit increased by 4.33%, and income increased by 205%, while Tesla’s gross profit declined by 6.8%.

That’s much more than a shot to the pride of Elon Musk or Tesla or U.S.-based automakers in general. It’s a genuine threat.

Don’t be misled. Tesla wasn’t erased and is unlikely to be. The company’s revenue topped $25 billion in the second quarter of this year, on the heels of record profits and revenue in 2022. Demand for electric battery vehicles in this country grew 80% in 2022, and President Biden’s goal to have half the cars made in the U.S. be electric by 2030 looms ever larger.

The problem is that the U.S. has only a fraction of the capacity to manufacture the batteries we need to meet even current demand. And China, our leading geopolitical adversary and the source of much of the raw materials required to make those batteries, now has even more reason to keep its rare earth minerals at home to help BYD.

We can’t stop the global shift to EVs from happening. Our choice is whether we want to depend on China and others in potentially unfriendly parts of the world to supply us with double and triple the volume of battery-making components we have now, develop our own capacity to gather the materials, but manufacture EV batteries outside the U.S., or substantially ramp up domestic production.

We should ramp up domestic EV battery production for the same reasons we should ramp up domestic oil production — for our economic, political and national security. Doing so ensures continuity, mitigates price shocks, expands the economy, and guarantees that this industry operates under appropriately strict and thoroughly enforced environmental laws.

There are signs of progress toward a U.S. EV industry that is more independent of unsavory global forces. U.S. companies recently invested $24 billion in EV battery manufacturing, more than 28 times the amount in 2020.

Federal legislation has added $7.5 billion for a national network of 500,000 EV chargers, $10 billion for clean transit and school buses, and billions more for tax credits to buyers and sellers of electric cars and those that make critical components, such as the semiconductors necessary for both electric and gas-powered vehicles — another area where current U.S. supply capabilities are woefully behind.

Only $7 billion went to finding the critical minerals and other components necessary to make those EV batteries — and without permitting reform, it will be difficult to access the substantial minerals and materials we already have within our borders and discover new deposits.

As for Ford Motor Co., the carmaker is trying to help close the gap in U.S. battery production. It plans to become the first automaker to produce lithium iron phosphate — or LFP — batteries in the U.S.

LFP batteries are extremely durable and use less of the high-demand, high-cost materials and minerals that make EVs less affordable. LFP batteries are also expected to reduce EV prices, increasing choices for American consumers and ensuring they have access to the most innovative products on the market.

Only 3% of EV batteries used in the U.S. were manufactured here in 2022. Rather than buying their LFP batteries from manufacturers in China and importing them, Ford plans to build them here at home, in Michigan.

Ford’s battery plant, which is already under construction, will employ 2,500 Americans and bring to scale U.S. EV battery production that is quicker and more cost-effective than any that exists today.

We can put our heads in the sand and pretend that the global transition to EVs isn’t happening or can be reversed, but doing so would be at our certain peril. Demand for EVs and, in turn, batteries and battery technology — not just for powering cars, but for all kinds of industries — is growing and will only accelerate.

That Ford is creating a domestic supply stream and Tesla is looking to do the same shows that carmakers are ready to nurture this industry, to bring it to life in all its forms and with all its benefits. The geopolitical opportunities are just too great, and the risks of inaction are unacceptable.