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When it comes to supply chains for the electric vehicle industry, China is far ahead for the number of batteries and EV cars that it produces. It's also cornered the market on the minerals, metal, cathodes and anodes that go into batteries. Can the rest of the world catch up? NPR's Jackie Northam takes a look.
JACKIE NORTHAM, BYLINE: The numbers speak for themselves when it comes to critical elements used in electric vehicle batteries and other forms of renewable energy storage. China mines more than two-thirds of the world's graphite, extracts 60% of the rare earth. It owns almost half of the cobalt mines and controls a quarter of the lithium.
CULLEN HENDRIX: It is no overstatement to say that China is the 800-pound gorilla of global EV supply chains at present.
NORTHAM: That's Cullen Hendrix at the Peterson Institute for International Economics. He says China not only dominates much of the raw supplies, it's also the unquestioned world leader when it comes to processing the minerals.
HENDRIX: Last year, China refined, you know, 95% of manganese, roughly 70% of cobalt and graphite, two-thirds of lithium, and over 60% of nickel. These are all the key materials for lithium-ion batteries that currently dominate the market.
NORTHAM: China is not geologically blessed with every material you could want for the energy transition. But Andrew Miller with Benchmark Mineral Intelligence, an analysis group, says China was just much faster than other countries at recognizing the shift to EV batteries and developed a long-term strategy.
ANDREW MILLER: They started partnering with other countries. They started buying from Australia and locking in that supply chain. They started investing in projects in - some in North America, actually, in projects, some in Africa. So they were very strategic much before most of the world have really woken up to the - to what was coming on the horizon.
NORTHAM: The Biden administration is determined to catch up. Last year, Biden signed the landmark Inflation Reduction Act to help mitigate climate change. The $369 billion IRA is filled with tax breaks to boost America's electric vehicle industry.
JOSE FERNANDEZ: Companies and countries are aware of this opportunity. And I'll tell you, since the passage of the IRA, we've seen announcements, investments of almost $140 billion in EV and battery manufacturing.
NORTHAM: Jose Fernandez is undersecretary of state for economic growth, energy and the environment. He told NPR the IRA needs to focus on supply chains if it's to reduce U.S. carbon emissions.
FERNANDEZ: If we are going to reach our clean energy goals, we are going to need to increase production in critical minerals by six to eight times what we have today. And that number is an exponential number when you get to lithium or graphite. We will need, for example, 42 times the amount of lithium that we use today and 25 times the amount of graphite.
NORTHAM: Fernandez says the U.S. is going to have to diversify its sources of minerals. But that's tough to do. To get the IRA tax breaks, companies have to get minerals domestically or with countries that have free trade agreements with the U.S. The problem is some of the largest deposits of nickel and cobalt are in Indonesia and the Democratic Republic of Congo, respectively, countries where the U.S. doesn't have free trade agreements. China, on the other hand, has large stakes in both countries. Benchmark Minerals' Miller says the U.S. has small amounts of those and other elements used in EVs, but permitting for mining and processing is cumbersome.
MILLER: You need to be able to put these facilities in place a lot quicker and get them up and running because the economics for a lot of these companies are incredibly challenging. And when you layer on years and years of permitting process, it often makes it a very difficult business case.
NORTHAM: There are other efforts beyond the IRA to chip away at China's lead such as developing batteries that don't use cobalt or nickel, or use sodium instead of lithium. The Peterson Institute's Hendrix says instead of fighting it, automakers, like Ford and Tesla, are turning to Chinese EV battery giant CATL to tap into its battery technology.
HENDRIX: It's the cheapest and fastest way to move forward and get to the forefront in using leading-edge battery technologies.
NORTHAM: Many analysts say the first step is borrowing technology before developing your own.
Jackie Northam, NPR News. Transcript provided by NPR, Copyright NPR.
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