Powering the Future: U.S. Invests Billions to Bolster Electric Vehicle and Grid Battery Supply Chain

The U.S. Department of Energy has announced a $3 billion investment in projects aimed at strengthening the domestic electric vehicle and grid battery supply chain, from mining to recycling. This strategic move aims to address the nation's reliance on China's dominance in critical raw materials and metals needed for clean energy projects.

Unlocking America's Clean Energy Potential

Bridging the Gap in Battery Manufacturing

The Department of Energy's latest funding initiative targets one of the biggest challenges facing the battery manufacturing industry: China's stranglehold on raw materials and metals essential for building clean energy projects. The 25 selected projects will support the retrofitting and construction of domestic facilities for mining, battery production, and recycling, helping to reduce the nation's dependence on foreign suppliers.Energy Secretary Jennifer Granholm emphasized the significance of these investments, stating that they will "help battery manufacturers meet the growing demand for U.S.-made [electric vehicles] and to help our grid store the record new amounts of wind and solar that are coming online." This strategic move aims to bolster the country's energy security and competitiveness in the global clean energy race.

Diversifying the Supply Chain

The funding, drawn from the $7 billion authorized in the 2021 bipartisan infrastructure law, represents the second round of awards focused on projects with a price tag of several hundred million dollars. This latest round follows the initial 21 projects announced in 2022, which were ultimately reduced to 14 projects valued at $1.82 billion.The Biden administration and Democrats have made concerted efforts to boost domestic clean energy manufacturing and production through the infrastructure law and the 2022 Inflation Reduction Act, which provides tax credits for domestically-produced batteries, including those for electric vehicles. However, the U.S. battery and EV sectors continue to face significant obstacles, partly due to China's dominant position in critical mineral extraction and processing.

Tackling the Mineral Dependency Challenge

To address this challenge, the Biden administration has implemented a range of tariffs on Chinese minerals and clean energy goods, such as solar panels. Additionally, the Department of Energy is considering a price support program for U.S. mineral production, as reported by POLITICO.The new projects, spanning 14 states, are expected to create approximately 12,000 jobs, with two-thirds of those in the construction sector. The investments are not limited to coastal states; they also extend to the Midwest and West, including battleground states like Arizona and Michigan, underscoring the administration's commitment to a nationwide clean energy transition.

Driving Private Sector Investment

Energy Secretary Granholm emphasized the private sector investment that is being spurred by these federal grants, stating that U.S. companies have announced more than $120 billion in investment in batteries since President Joe Biden took office. This public-private partnership is seen as a crucial step in strengthening the domestic battery and EV supply chain.Abigail Hunter, the executive director of the nonprofit SAFE's Center for Critical Minerals Strategy, praised the "much-needed investment," noting that U.S. battery production "will define our future competitiveness and energy security." The projects must undergo environmental review and a negotiation process with the Department of Energy before being finalized.

Boosting Domestic Mineral Production

A portion of the funding is dedicated to increasing the production of critical minerals that have emerged as supply chain bottlenecks for electric vehicles, renewables, and defense applications. This includes investments in lithium, a key component of lithium-ion batteries used in EVs and grid storage.The grants will support projects aimed at extracting lithium from brine, such as the $225 million award to SWA Lithium, a joint venture between Standard Lithium and Equinor, to advance a commercial-scale direct lithium extraction project in Arkansas. Additionally, TerraVolta Resources received a $225 million grant to use direct-lithium extraction technology in the Texarkana region.The funding will also benefit lithium processing projects, with Albemarle receiving $67 million to retrofit a facility to produce lithium anode batteries in North Carolina.

Accelerating Critical Mineral Projects

The announcement also marks a significant boost for the first critical minerals project that the Biden administration has opted to fast-track through a special permitting process. The Department of Energy awarded a $166 million grant to South32 Hermosa, which is building a $1.7 billion underground manganese and zinc mine and processing plant in southern Arizona.This project was designated by the Biden administration last year to receive an expedited federal permitting review through the FAST-41 process, which was established during the Obama administration. Pat Risner, the president of South32 Hermosa, stated that the project has the potential to provide a "reliable, lower carbon and cost-effective domestic option for manganese products within the electric vehicle battery supply chain that currently relies entirely on foreign imports."

Diversifying Battery Technologies

The funding also supports projects focused on newer battery technologies and the battery production process in general. For instance, Mitra Chem received a $100 million grant to support the development of lithium-iron batteries, a cheaper but less dense alternative to lithium-ion technology.Additionally, Dow Chemical is slated to receive $100 million to create a plant on the Gulf Coast that will use waste carbon dioxide to produce carbonate solvents, a class of material that improves battery function.These investments in innovative battery technologies and production processes underscore the administration's commitment to diversifying the nation's clean energy portfolio and reducing reliance on traditional lithium-ion batteries.