US awards $3bn for electric car battery production as it seeks to counter China

The Biden administration is set to award over $3bn to US firms in a bid to boost domestic production of advanced batteries and other materials used for electric vehicles, as part of an ongoing effort to challenge China's global dominance in EV battery production.

The grants will fund 25 projects across 14 states, including key battleground states such as Michigan and North Carolina, as well as Ohio, Texas, South Carolina and Louisiana. Announced on Friday, this marks the second round of EV battery funding under the bipartisan infrastructure law passed in 2021.

An earlier round allocated $1.8bn for 14 projects that are still underway. These totals are lower than those announced in October 2022, reflecting several projects that were either withdrawn or rejected by US officials during sometimes lengthy negotiations.

This funding forms part of a broader initiative by President Joe Biden and Vice President Kamala Harris to promote the production and sales of electric vehicles as a crucial part of their strategy to combat climate change and bolster US manufacturing. Companies receiving awards process lithium, graphite or other battery materials, or manufacture components used in EV batteries.

White House economic adviser Lael Brainard stated: "Today’s awards move us closer to achieving the administration’s goal of building an end-to-end supply chain for batteries and critical minerals here in America, from mining to processing to manufacturing and recycling, which is vital to reduce China’s dominance of this critical sector,'' White House economic adviser Lael Brainard said.

The Biden-Harris administration is "committed to making batteries in the United States that are going to be vital for powering our grid, our homes and businesses and America’s iconic auto industry,'' Brainard told reporters Thursday during a White House call.

The awards announced on Friday amount to nearly $35bn in total US investments to strengthen domestic critical minerals and battery supply chains, Brainard revealed, citing projects ranging from major lithium mines in Nevada and North Carolina to battery factories in Michigan and Ohio to production of rare earth elements and magnets in California and Texas.

"We’re using every tool at our disposal, from grants and loans to allocated tax credits,'' she said, adding that the administration's approach has leveraged more $100bn in private sector investment since Biden took office.

In recent years, China has cornered the market for processing and refining key minerals such as lithium, rare earth elements and gallium, and also has dominated battery production, leaving the U.S. and its allies and partners " she said, adding that the administration's approach has leveraged more than $100bn in private sector investment since Biden took office.

The US has retaliated with what she described as "tough, targeted measures to enforce against unfair actions by China." Just last week, officials increased tariffs on Chinese imports of critical minerals such as graphite used in EV and grid-storage batteries. The administration also implemented the 2022 climate law to encourage domestic sourcing for EVs sold in the US and imposed restrictions on products from China and other adversaries identified by the US as foreign entities of concern.

"We're committed to making batteries in the United States of America,'' stated Energy Secretary Jennifer Granholm. If approved, awards announced Friday will back 25 projects with 8,000 construction jobs and over 4,000 permanent jobs, officials revealed.

Companies will be obliged to match grants on a 50-50 basis, with a minimum $50m investment, according to the Energy Department. While federal funding may not be crucial for some projects, the cash injection from the infrastructure and climate laws has significantly transformed the US battery manufacturing sector in recent years, observed Matthew McDowell, associate professor of engineering at Georgia Institute of Technology.

McDowell expressed his enthusiasm about the next generation of batteries for clean energy storage, including solid state batteries, which could potentially hold more energy than lithium ion.