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50% EVs by 2030? It's looking doubtful.

Experts say the likelihood that the U.S. will meet President Biden's goal that 50% of the cars on the road will be EVs by 2030 is doubtful. Why? Here's their take.

Semiconductor shortage

Young couple with woman leaning against an EV while man is putting in charger.

In reporting on Intel's quarterly earnings, Intel's chief executive Pat Gelsinger believes the global chip shortage will last into 2024 and not end in 2023 as originally hoped. Even with large plants being built in the U.S. to help address our dependence on foreign contract companies making chips, acquiring the equipment needed to manufacture them, not to mention the building materials shortage for the factories themselves, is proving difficult. Covid, labor shortages, and transportation woes have set back timing by months, if not a year or more.

In addition to the time it will take to construct the factories and source the equipment, typical lead times for manufacturing the chips can exceed four months for those already well established in a manufacturing line. Increasing capacity by moving a product to another manufacturing site usually adds another six months (even in existing plants), and switching to a different manufacturer typically adds another year or more because the chip's design requires alterations to match the specific manufacturing processes of the new partner. Some chips may contain manufacturer-specific intellectual property that require alterations or licensing, which adds more length to the timeline.

The semiconductor shortage currently hampering the auto industry, according to RJ Scaringe, CEO of EV startup Rivian, is just a "small appetizer to what we are about to feel on battery cells over the next two decades." And, with EV manufacturers' lofty production goals, every part of the supply chain is struggling to keep up.

Battery Cells Require Hard to Source Raw Materials

In addition to lithium, EV batteries require several raw materials to produce including cobalt, nickel, graphite, and rare earth. As EV demand has risen, raw material prices have gone through the roof. Lithium alone has gone up in price by over 480% in the past year, in part because of demand and in part because of its mining process.* Tesla CEO Elon Musk has said lithium battery prices were so “insane” that he might just get into mining himself.

"Most lithium, which is used in batteries, is mined in South America or Australia and shipped to China for processing, and then shipped to other parts of the world to be put in EVs," said Sam Abuelsamid, principal analyst on E-Mobility at Guidehouse Insights in Detroit. China is the world leader in lithium-ion battery manufacturing and has a history of restricting trade for political reasons. Russia produces about 20% of the world's battery-quality nickel, and the war has also effectively shut down the nickel trade.

In addition to harder to get materials, EV batteries are heavy and the cost to transport them around the world doesn’t make sense either, Abuelsamid said, adding, "You’re going to eat up the emissions you save in making these vehicles with the emissions used to ship them around the world." The high price of fuel only adds to the expense.

Still, global EV adoption is accelerating at lightning speeds, even when environmental and humanitarian concerns are impacting current and future exploration and production projects for extracting them.

Take cobalt mining as an example. Sixty-five percent of the global supply comes from the Democratic Republic of Congo (DRC). Severe human rights abuses, dangerous working conditions, forced labor, and child labor plague the extraction process, yet demand for this element may reach as high as 430,000 tons this decade.

Overall Vehicle Price Remains An Issue

Lithium-ion batteries are 30% of the cost of an EV. Expensive raw materials are partly to blame for the almost 10% price hikes on Rivian and Tesla models have seen over the past year, but production, labor, and supply chain issues account for a larger proportion.

U.S. automakers are lobbying for increased materials mining in the U.S. to offset the added costs associated with offshore mining. The U.S. currently produces only 9% of the world’s battery cells as there has been little mining for the raw materials here due to low market demand — until recently. It could take a decade, however, to see these projects and manufacturing facilities up and running. According to Rivian's Scaringe, today "90-95% of the supply chain does not exist" for manufacturing the number of vehicles needed to reach Biden's 50% goal. This means the sticker price on EVs won't go down for car buyers in the near term.

In the interim, consumers are being asked to pay an average of $50,000 for an EV (The Nissan Leaf starts at $27,400 while a Tesla S starts at a whopping $94,000).

What The Government is Doing To Help

On March 31, 2022, President Biden invoked the Defense Production Act in a move to give the government more avenues to support for the mining, processing and recycling of critical materials. The White House now considers the EV supply chain as a national security issue.

The Defense Production Act has been amended to include lithium, nickel, graphite, cobalt, and manganese which could help mining companies get $750 million under the act's Title III fund.

The act helps fund "production at current operations, productivity and safety upgrades, and feasibility studies. In addition to EV batteries, the directive also would apply to large-capacity batteries," a Bloomberg report said. MP Materials Corp. is the only U.S. company that produces rare earth metals needed for EVs, but the Biden administration has allocated at least $6 billion as part of the infrastructure bill to develop a U.S. battery supply chain.

This might help in the recycling of battery materials, too. Recycling could meet roughly 25-30% of the demand for critical materials, J.B. Straubel, founder and CEO of lithium-ion battery recycling firm Redwood Materials, said. Joe Britton, the executive director of the advocacy group Zero Emission Transportation Association, told U.S. Sen John Hickenlooper, D-Colorado that 95% of the minerals used in electric vehicle batteries could be recycled.

On the opposition front, many in the House and Senate are against adding to increasing the number of EVs on the road as most of the materials come from "adversaries" like China and Russia. So until more batteries can be manufactured in the U.S., we can expect political opposition to efforts to meet Biden's 2030 goal.

This sort of opposition can impact efforts to create penalties for non-compliance and the emergence of other new policies. This is in spite of an International Energy Agency report in May that calls for an end date to gas car sales. The IEA has concluded that by 2035 at the latest, governments will have to halt sales of gas cars and even hybrids in order to stay on track with the Paris climate accord globally. Transportation fuels in the U.S. are the single largest source of U.S. greenhouse gas emissions.

The Bottom Line

Given the materials shortages, political opposition, manufacturing challenges, and rising costs, making Mr. Biden's 2030 goal is, according to Matty Merritt with Morning Brew, like "asking MasterChef contestants to make a meal with two footballs and a single noodle."


*Benchmark Mineral Intelligence

Sources: The Brew, Energy Wire, Idaho Capital Sun, Detroit Free Press,, NCBI.nlm.nih, Forbes, Motortrend



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