Many experts are sounding the alarm about the status of the U.S. lithium battery supply chain.
As we noted in our post last week, a Li-Bridge report released in mid-February, Building a Robust and Resilient U.S. Lithium Battery Supply Chain, describes two specific issues that make the U.S. particularly vulnerable in this context:
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Concentrated global manufacturing capacity for batteries and battery materials: “China controls the largest global capacity share: >75% of cell production, >70% of processed energy material production, and >60% of energy materials purification and refinement.”
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A limited supply of essential raw materials: “…several raw minerals essential to batteries (particularly lithium, nickel, and copper) are forecasted to be in short supply globally over the next decade as demand grows faster than extraction capacity. Global competitors have spent the last decade buying up much of this limited supply.”
Created in early 2022 by the U.S. Department of Energy (DOE), Li-Bridge is a project made up of the leading experts in battery technology from across the U.S. industry who worked together to develop a strategy for establishing “a robust and sustainable supply chain for lithium battery technology in North America.”
Last week, we covered the lithium battery supply chain problem as described by Li-Bridge—as well as key takeaways and challenges. In this week’s post, we’ll cover Li-Bridge’s goals and recommendations.
Li-Bridge’s Interim and Long-Term Goals
In listing its goals for the U.S. lithium battery industry, Li-Bridge cites the National Blueprint for Lithium Batteries developed by the Federal Consortium for Advanced Batteries (FCAB) and published in June 2021.
The vision described in the Blueprint is that by 2030, “the United States and its partners will establish a secure battery materials and technology supply chain that supports long-term U.S. economic competitiveness and equitable job creation, enables decarbonization, advances social justice, and meets national security requirements.”
Li-Bridge says that although it’s supportive of this vision, achieving it within that time frame “will be challenging, given the industry’s present state.”
As a result, Li-Bridge defined an interim goal—to be achieved by 2030—and a long-term goal, to be achieved by 2050.
Li-Bridge’s 2030 Goal: Majority domestic value-added
Noting that it doesn’t view FCAB’s proposed U.S. achievement of “complete lithium battery supply chain independence by 2030” a realistic goal, Li-Bridge says it does see capturing “a majority of the value of lithium battery cells consumed domestically” as within the realm of possibility. Li-Bridge defines “a majority” as “60 percent of the economic value consumed by U.S. domestic demand for lithium batteries,” which is an increase from the 30 percent which would be the result of “doing business as usual.”
So what would be needed to achieve that goal?
Li-Bridge says a 60 percent domestic value-added goal for 2030 is based on the assumption that the following factors related to the lithium battery supply chain will be true:
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Cell manufacturing—about 90 percent of lithium battery cells consumed in the U.S. will be manufactured here.
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Active material and inactive component production—around 50 percent of each that are needed will be manufactured in the U.S.
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Material refining and processing—approximately 50 percent of the chemical precursor materials needed will be manufactured domestically.
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Raw material production—about 50 percent of the raw lithium supply needed will be produced “from North American sources, virgin or recycled.”
Li-Bridge offers a caveat on the last, noting that “Due to long development timelines of raw material projects, Li-Bridge recognizes that the fourth goal listed above currently has the lowest probability of being achieved by 2030.”
Li-Bridge’s 2050 Goal: Effective self-sufficiency and export opportunities
Li-Bridge’s 2050 goal is much more lofty—thus the longer timeframe.
“Li-Bridge believes that by 2050, the U.S. industry should be able to self-supply nearly 100% of the domestic need for lithium battery technology,” the report says. “By 2050, most of the energy materials needed to satisfy domestic demand should come from lithium batteries recycled in the United States. Given sufficient investments in lithium battery know-how and battery technology innovation, Li-Bridge believes that by 2050, U.S. companies can become a global power in the lithium battery industry and a major exporter of finished batteries and battery-related technology to the world.”
Li-Bridge’s Recommendations for Getting There
Based on its collaborative efforts with “the leading experts in lithium battery technology in the U.S. industry, academia and the national laboratory systems,” Li-Bridge says it has adopted a number of recommendations for both the U.S. government and U.S industry. The individual recommendations are “organized around five recommended objectives for the U.S. lithium battery supply chain,” including:
1. Improve investment attractiveness of U.S.-based lithium battery technology and material production through expanded and better designed supply- and demand-side incentives.
“The U.S. government must take actions to enhance the expected returns on financial investments in U.S.-based lithium battery supply chain-related projects (e.g., battery materials, components, cells, or manufacturing equipment) and reduce the perception of demand uncertainty in the U.S. battery market. …”
2. Support research, enable product and business model innovation, and accelerate pathways to commercialization through investments in R&D and validation and scaling capabilities.
“The United States must redouble its support for technological innovation, a key strength and competitive advantage of U.S. society,” and also increase support for “the commercialization and manufacture of domestic battery innovations. …”
3. Help U.S. companies secure access to critical raw minerals and processed energy materials (virgin and recycled, domestic- and foreign-sourced) and low-carbon infrastructure.
“The United States must work simultaneously to encourage the development of minerals and materials mining domestically and to secure the supply of raw products from reliable trading partners abroad. …”
4. Address know-how gaps by investing in workforce training.
“The education of skilled battery technicians and engineers is essential for establishing, automating, and continuously improving domestic manufacturing and for bridging gaps in the U.S.’s supply chains. …”
5. Establish an enduring U.S. public-private partnership to support the development of a robust and sustainable lithium battery supply chain in North America.
“Building a robust and sustainable lithium battery supply chain across the United States and its allies will require effort from multiple state, local and federal government agencies as well as private industry.” Noting that “many of those efforts are already underway,” Li-Bridge warns of “a real danger that those initiatives will be less effective than they could be because of lack of coordination, oversight, and accountability for results. …”
Please join us next week for the last post in our series in which we’ll take a look at how the U.S. is bolstering its lithium battery supply chain by building new partnerships—and what additional experts say about whether such efforts can effectively meet short-term needs.
Until then, check out this CNBC video from early 2022 in which various experts describe “Why The U.S. Has A Massive Lithium Supply Problem.”
