On 19^th October 2022, the US Department of Energy announced it has granted $2.8 billion to 20 companies to expand the facilities to commercial scale in 12 states to extract and process lithium, graphite and other battery materials, manufacture battery components and develop new approaches, including the production of battery components from recycled material.

• The $2.8 billion grant is the first phase of the $7.0 billion Infrastructure Law promoting clean energy and the use of electrified transport.
• Recipients will also invest $9.0 billion to their battery operations. Six of the companies are also assisting disadvantaged communities in their projects.
• The announcement did not disclose the recipients. But Sila Nanotechnologies, a silicon anode technology provider in Washington state, said it had received a $100 million grant.
• The investments will support the US government’s aim in raising domestic production of clean energy technology – as noted in the recently passed Inflation Reduction Act (IRA), generating employment in the US, ensure that 50 percent of new vehicle sales will be battery electric by 2030 and that a zero-emission economy will be in place by 2050.

Funding goals from the US DOE announcement are:

• Developing enough battery-grade lithium to supply approximately 2.0 million electric vehicles annually;
  • Statevolt and Controlled Thermal Resources (CTR) are exploiting lithium from the Salton Sea, California.
• Developing enough battery-grade graphite to supply approximately 1.2 million EVs annually;
  • Syrah graphite anodes are being produced in Vidalia, Louisiana.
• Producing enough battery-grade nickel to supply approximately 400,000 EVs annually;
• Installing the first large-scale, commercial lithium electrolyte salt (LiPF₆) production facility in the US;
• Developing an electrode binder facility capable of supplying 45 percent of the anticipated domestic demand for binders for EV batteries in 2030;
• Creating the first commercial scale domestic silicon oxide production facilities to supply anode materials for an estimated 600,000 EV batteries annually; and
  • Sila is to start production of silicon anodes from its Moses Lake, Washington facility in 2024 (pictured below).
• Installing the first lithium iron phosphate cathode facility in the US.
  • Magnis Energy has developed a Bio-Mineralized Lithium Mixed-metal Phosphate (BMLMP) battery chemistry that does not require cobalt and nickel. It will be implemented by its joint venture with C4V at Endicott, New York.

The US DOE notes that virtually all lithium, graphite, battery-grade nickel, electrolyte salt, electrode binder and iron phosphate cathode material are produced abroad, with China controlling the supply chains for many of these key inputs.

• While investments have been announced to raise scale in electric vehicle, battery pack and battery cell production in the US, there have been fewer investments in starting or raising scale in battery material mining, processing and component production. Also, there is uncertainty to trade agreements with countries that have considerable reserves of battery material and the volatile politics governing the US that can amend or even scrap the IRA.
• So, the short-notice requirement, that at least 50 percent of the battery's material is to be sourced from US supplies or from a “trading partner” nation by 2024 (and 80 percent by 2026), by the IRA is unlikely to be met by most auto makers and could see some near-term adjustments to make the mandate more achievable. What the $2.8 billion grant does is to raise the possibility that the IRA requirements can be met.
• Recent localising of battery production in Europe and North America has come about as auto makers there become “all-electric” by government mandates seeking to combat climate change. But what the DOE announcement underlines is how far ahead Chinese battery and material processing vendors are because of the earlier policy in promoting electrification there, not just in terms of controlling air pollution but also generating an industry that China could lead in.

Further details on electric vehicle battery technology and production can be found in the Strategy Analytics reports:

• Electric Vehicle Batteries: LFP Boosted By Pack Topologies, But Race On For Cost-Effective Chemistries
• Electric Vehicle Battery Outlook 2020-2029: Production Boost as Auto Makers Go All-Electric, Supply Also Being Localized

Kevin Mak is a Principal Analyst in the Global Automotive Practice at Strategy Analytics, covering the Electric Vehicle Service.