Abigail Ross Hopper, CEO of the USITC, said “The United States’ ability to lead the global clean energy transition and improve grid reliability depends on how quickly we expand domestic production and deploy the lithium-ion battery energy storage technology.”
A new whitepaper titled Energizing American battery storage manufacturing laid out the competitive landscape of energy storage manufacturing and elaborated on the challenges must be addressed by US to reduce its reliance on battery import and strengthen its energy security.
The government’s policy supported domestic manufacturing, which was most prominent in the measures of The Bipartisan Infrastructure Deal and Inflation Reduction Act, which encouraged domestic manufacturing of battery demand and supply.
In the year since the Inflation Reduction Act was introduced, the United States has announced investments of $300 billion in clean energy, much of it for battery factory construction—an area in which the United States has already surpassed Europe. European Union (EU) is also launching its own equality act, the New Battery Regulation. EU member states are also beginning their negotiation on this issue.
Of course, the main "competitor" of the United States and Europe is China. China owns about 90% of the world's lithium-ion battery manufacturing and almost all the material processing industry chains.
The annual lithium-ion battery production capacity in the United States is about 190GWh in 2023. SMM predicts that the domestic battery production capacity in the United States will increase to about 800GWh by 2027. By then, the total demand for lithium-ion batteries from electric vehicles and energy storage in the United States may rise to 380GWh.
However, not all predicted new capacity plans are guaranteed to materialize, and perhaps more importantly, electric vehicles will remain the main target market for battery manufacturers. Although some battery manufacturers have not yet specified whether they will also produce batteries to meet the needs of the energy storage market, about 90% of the newly announced capacity will be used for automobiles, and the remaining 10% will be distributed between lithium-ion battery storage and other applications.
Graphite supply has "potential bottleneck"
While it won’t be too difficult to find resources such as lithium and phosphorus from U.S. or FTA countries by 2030, the U.S. market will still need to compete with other countries for supplies, and China is the most common destination for lithium among FTA countries.
However, as the main anode raw material, graphite may has a "potential bottleneck." Currently, the United States does not have any natural graphite production base. With 60% of the mined graphite in the past five years coming from China, the United States is likely to rely on purchases from Canada or Australia. However, neither country can meet the production scale required by the United States.
IRA incentives reduce U.S. production costs by 40%
The government's policy support, especially through the IRA, will have a positive impact on the cost competitiveness of the United States. It is expected that the IRA will reduce U.S. production costs by more than 40%. State-level policies can also play a role with different types of incentives such as tax credits, support for workforce development plant siting and license, providing critical early support for supply chains construction for plants and R&D activities from mining to smelting.
