Making EVs without China’s supply chain is hard, but not impossible – 3 supply chain experts outline a strategy

Automaker GMC shows off its Hummer EVs at a plant in Detroit. Nic Antaya/Getty Images

by Ho-Yin Mak, Georgetown University; Christopher S. Tang, University of California, Los Angeles, and Tinglong Dai, Johns Hopkins University

Two electrifying moves in recent weeks have the potential to ignite electric vehicle demand in the United States. First, Congress passed the Inflation Reduction Act, expanding federal tax rebates for EV purchases. Then California approved rules to ban the sale of new gasoline-powered cars by 2035.

The Inflation Reduction Act extends the Obama-era EV tax credit of up to US$7,500. But it includes some high hurdles. Its country-of-origin rules require that EVs – and an increasing percentage of their components and critical minerals – be sourced from the U.S. or countries that have free-trade agreements with the U.S. The law expressly forbids tax credits for vehicles with any components or critical minerals sourced from a “foreign entity of concern,” such as China or Russia.

That’s not so simple when China controls 60% of the world’s lithium mining, 77% of battery cell capacity and 60% of battery component manufacturing. Many American EV makers, including Tesla, rely heavily on battery materials from China.

The U.S. needs a national strategy to build an EV ecosystem if it hopes to catch up. As experts in supply chain management, we have some ideas.

Why the EV industry depends heavily on China

How did the U.S. fall so far behind?

Back in 2009, the Obama administration pledged $2.4 billion to support the country’s fledgling EV industry. But demand grew slowly, and battery manufacturers such as A123 Systems and Ener1 failed to scale up their production. Both succumbed to financial pressure and were acquired by Chinese and Russian investors.

China took the lead in the EV market through an aggressive mix of carrots and sticks. Its consumer subsidies raised demand at home, and Beijing and other major cities set licensing quotas mandating a minimum share of EV sales.

China also established a world-dominating battery supply chain by securing overseas mineral supplies and heavily subsidizing its battery manufacturers.

Today, the U.S. domestic EV supply chain is far from adequate to meet its goals. The new U.S. tax credits are designed to help turn that around, but building a resilient EV supply chain will inevitably entail competing with China for limited resources.

A comprehensive national strategy entails measures for the short, medium and long term.

Short-term: What can be done now?

Six of the 10 best-selling EV models in 2022 are already assembled in the U.S., fulfilling the Inflation Reduction Act’s final assembly location clause. The Hyundai-Kia alliance, which has three of the other four bestsellers, plans to open an EV assembly line in Georgia. Volkswagen has also started assembling its ID.4 electric SUV in Tennessee.

The challenge is batteries. Besides the Tesla-Panasonic factories in Nevada and planned in Kansas, U.S.-based battery manufacturers trail their Chinese counterparts in both size and growth.

For the U.S. to scale up its own production, it needs to rely on strategic partners overseas. The Inflation Reduction Act allows imports of critical minerals from countries with free trade agreements to still qualify for incentives, but not imports of battery components. This means overseas suppliers like Korea’s “Big Three” – LG Chem, SK Innovation and Samsung SDI – which supply 26% of the world’s EV batteries, are shut out, even though the U.S. and Korea have a free trade agreement.

A Sankey chart, also known as a spaghetti chart, shows the flow of cobalt Congo, with some resources in the rest of the world, through to the production of EVs.
The bulk of the world’s cobalt is mined in the Democratic Republic of Congo but processed and turned into lithium-ion battery components by Chinese companies. This chart shows the pathways from mining to EVs. Based on an NREL presentation in 2020, CC BY-ND

The Korea Automobile Manufacturers Association has asked Congress to make an exception for Korean-made EVs and batteries.

In the spirit of “friend-shoring,” the Biden administration could think of a temporary waiver as a stopgap measure that makes it easier for Korean battery makers to move more of their supply chain to the U.S., such as LG’s planned battery plants in partnerships with GM and Honda.

The 2021 Infrastructure Act also provided $5 billion to expand charging infrastructure, which surveys show is critical to bolstering demand.

Medium-term: Diversifying lithium and cobalt supplies

A strong and concerted effort in trade and diplomacy is necessary for the U.S. to secure critical mineral supplies.

As EV sales rise, the world is expected to face a lithium shortage by 2025. In addition to lithium, cobalt is needed for high-performance battery chemistries.

The problem? The Democratic Republic of the Congo is where 70% of the world’s cobalt is mined, and Chinese companies control 80% of that. The distant second-largest producer is Russia.

The Biden administration’s “friend-shoring” vision has a chance only if it can diversify the lithium and cobalt supply chains.

Bars on a map show countries with the most critical mineral production.
Lithium, cobalt and nickel are critical components in many EV batteries. The largest 2021 production sources included the Democratic Republic of Congo for cobalt; Australia, Chile and China for lithium; and Indonesia, the Philippines and Russia for nickel. The Conversation, USGS Mineral Commodity Summaries 2022, CC BY-ND

The “Lithium Triangle” of South America is one region to invest in. Also, Australia, a key U.S. ally, leads the world in lithium production and possesses rich cobalt deposits. Waste from many of Australia’s copper mines also contains cobalt, lowering the cost. GM has reached an agreement with the Australian mining giant Glencore to mine and process cobalt in Western Australia for its Ohio battery plant with LG Chem, bypassing China.

A way to avoid cobalt altogether also exists: lithium-iron-phosphate batteries are about 30% cheaper to make because they use minerals that are easy to find and plentiful. However, LFP batteries are heavier and have less power and range per unit.

For years, Chinese companies like CATL and BYD were the only ones making LFP batteries. But the patent rights associated with LFP batteries expire this year, opening up an important opportunity for the U.S.

Since not everyone needs a high-end electric supercar, affordable EVs powered by LFP batteries are an option. In fact, Tesla now offers Model 3s with LFP batteries that can travel about 270 miles on a charge.

The 2021 Bipartisan Infrastructure Law set aside $3.16 billion to support domestic battery supply chains. With the Inflation Reduction Act’s emphasis on supporting more affordable EVs – it has price caps for vehicles to qualify for incentives – these funds will be needed to help scale up domestic LFP manufacturing.

Long-term: US critical mineral production

Replacing overseas critical materials with domestic mining falls under long-term planning.

The scale of current domestic mining is minuscule, and new mining operations can take seven to 10 years to establish because of the lengthy permitting process. Lithium deposits exist in California, Maine, Nevada and North Carolina, and there are cobalt resources in Minnesota and Idaho.

Finally, to build an industrial commons for EVs, the U.S. must continue to invest in research and development of new battery technologies.

A field sectioned into rectangles with bright turquoise water or white salt stretches over several miles of otherwise empty landscape with mountains far in the distance.
Pools of brine containing lithium carbonate stretch across a lithium mine in the Atacama Desert of Chile. Local opposition can be a challenge to mining proposals. John Moore/Getty Images

Also, end-of-life battery recycling is essential to the sustainability of EVs. The industry has been kicking the can down the road on this, as recycling demand has been minuscule thus far given the longevity of batteries. Yet, as a proactive step, the Inflation Reduction Act specifically permits battery content recycled in North America to qualify for the critical mineral clause.

To make this happen, the federal and state governments could use takeback legislation similar to producer responsibility laws for electronic waste enacted in more than 20 states, which stipulate that producers bear the responsibility for collecting, transporting and recycling end-of-cycle electronic products.

What’s ahead

With the new law, the Biden administration has set its sights on a future transportation system that is built in the U.S. and runs on electricity. But there are supply chain obstacles, and the U.S. will need both incentives and regulations to make it happen.

California’s announcement will help. Under the Clean Air Act, California has a waiver that allows it to set policies more strict than federal law. Other states can choose to follow California’s policies. Seventeen other states have adopted California’s emissions standards. At least three, New York, Washington and Massachusetts, have already announced plans to also phase out new gas-powered cars and light trucks by 2035.

Ho-Yin Mak, Associate Professor in Operations & Information Management, Georgetown University; Christopher S. Tang, Professor of Supply Chain Management, University of California, Los Angeles, and Tinglong Dai, Professor of Operations Management & Business Analytics, Carey Business School, Johns Hopkins University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

CCEP launches ‘first-of-its-kind’ sustainable supply chain finance program with Rabobank

Read the full story at Beverage Daily.

With more than 90% of its emissions attributed to its supply chain, Coca-Cola Europacific Partners has launched a new sustainability-linked supply chain finance program to incentivize and reward suppliers for improving their ESG performance.

Small companies can make a big difference in reducing emissions for last-mile logistics

Read the full story in the American Journal of Transportation.

In North America, the transportation sector has been identified as the single largest contributor of greenhouse gas emissions, at 28%. The logistics sector impacts nearly every other business and industry, by means of supplying essential goods, transporting raw materials, storing goods, and providing last-mile delivery.

Logistics software provider CartonCloud’s CEO Vincent Fletcher said for companies wishing to reduce emissions and meet their own carbon targets, they must be able to show full visibility across their entire supply chain — including each touchpoint from various logistics providers— which means entering the world of digitalization for many smaller providers.

How supply chain visibility improves your sustainability

Read the full story in Packaging Digest.

Improving collaboration between customers and suppliers will reduce waste, which benefits businesses and the environment.

Carbon Capture, Transport, & Storage: Supply Chain Deep Dive Assessment

Download the document.

The report America’s Strategy to Secure the Supply Chain for a Robust Clean Energy Transition lays out the challenges and opportunities faced by the United States in the energy supply chain as well as the federal government plans to address these challenges and opportunities. It is accompanied by several issue-specific deep dive assessments, including this one, in response to Executive Order 14017 America’s Supply Chains, which directs the Secretary of Energy to submit a report on supply chains for the energy sector industrial base. The Executive Order is helping the federal government to build more secure and diverse U.S. supply chains, including energy supply chains.

To combat the climate crisis and avoid the most severe impacts of climate change, the U.S. is committed to achieving a 50 to 52 percent reduction from 2005 levels in economy-wide net greenhouse gas pollution by 2030, creating a carbon pollution-free power sector by 2035, and achieving net zero emissions economy-wide by no later than 2050. The U.S. Department of Energy (DOE) recognizes that a secure, resilient supply chain will be critical in harnessing emissions outcomes and capturing the economic opportunity inherent in the energy sector transition. Potential vulnerabilities and risks to the energy sector industrial base must be addressed throughout every stage of this transition.

The DOE energy supply chain strategy report summarizes the key elements of the energy supply chain as well as the strategies the U.S. government is starting to employ to address them. Additionally, it describes recommendations for Congressional action. DOE has identified technologies and crosscutting topics for analysis in the one-year time frame set by the Executive Order.

Along with the policy strategy report, DOE is releasing 11 deep dive assessment documents, including this one, covering the following technology sectors:
• Carbon capture materials,
• Electric grid including transformers and high voltage direct current (HVDC),
• Energy storage,
• Fuel cells and electrolyzers,
• Hydropower including pumped storage hydropower (PSH),
• Neodymium magnets,
• Nuclear energy,
• Platinum group metals and other catalysts,
• Semiconductors,
• Solar photovoltaics (PV), and
• Wind.

DOE is also releasing two deep dive assessments on the following crosscutting topics:
• Commercialization and competitiveness, and
• Cybersecurity and digital components.

More information can be found at

Delectable but destructive: Tracing chocolate’s environmental life cycle

Read the full story at Monga Bay.

Chocolate is a treat beloved across the world. But how much do we know about our favorite guilty pleasure’s environmental impacts?

A recent study, published in the journal Science Advances, sheds light on key ingredients that make their way into many chocolate products — often untraced, and possibly linked to deforestation in Latin America, Africa and Asia.

The study found that high volumes of cocoa, palm oil and soy — key ingredients used in bulk to make some of our chocolate favorites — are currently traded with little to no traceability via indirect supply chains.

Finding your match in the carbon economy

Read the full story at GreenBiz.

The Department of Energy’s new Carbon Matchmaker tool is an important resource to jumpstart the burgeoning carbon economy. The interactive map acts as a coordination tool, helping carbon dioxide capturers, users, removers and storers find each other. The map helps visualize the current supply chain for carbon across a region and allows the companies to identify the most fruitful carbon management partnerships near them. 

Apparel retailers Macy’s, JCPenney join Better Cotton

Read the full story at Just Style.

Non-profit Better Cotton has announced 192 retailers, brands, suppliers, manufacturers and civil society organisations joined its membership in the first half of 2022, including apparel retailers Macy’s and JCPenney.

Semiconductor Supply Chain: Policy Considerations from Selected Experts for Reducing Risks and Mitigating Shortages

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What GAO Found

Experts interviewed by GAO shared their views on policy options in several areas that could reduce semiconductor supply chain risks (see figure). Across these areas, workforce development was the one area where all 17 experts GAO interviewed agreed on the need to take action. At the same time, the experts generally emphasized the value of implementing policies in each of these areas and said that no single policy option would be sufficient. Instead, the experts recommended implementing a variety of policy options, such as addressing immigration reform and improving supply chain monitoring.

Federal Actions that Could Reduce Semiconductor Supply Chain Risks
Federal actions that could reduce semiconductor supply chain risks

The experts GAO spoke with discussed the need for identifying federal priorities and improving interagency collaboration in implementing policies to mitigate semiconductor supply chain risks. Examples of policy priorities that experts discussed related to semiconductor supply chain risks include national security, economic competitiveness, and increased resilience. Experts stated that identifying the most appropriate policy option depends on the federal priority. For example, one expert said the extent to which increasing semiconductor production in the U.S. is important depends on whether national security is the policy priority. Geographic diversity, including production outside the U.S., might be desirable if economic competitiveness of U.S.-headquartered companies or increased supply chain resilience are priorities. Additionally, experts noted that multiple federal agencies have activities related to semiconductor supply chains and described ways in which improved coordination among agencies would allow the U.S. to act more strategically. For example, one expert said that agencies working on semiconductor issues should identify current activities as well as the need for additional action.

Why GAO Did This Study

A global semiconductor shortage that began in 2020 has since affected multiple U.S. industries. Beyond having an immediate economic impact, the shortage has exposed long-term risks in the semiconductor supply chain. Further, U.S. policymakers have expressed concerns about the nation’s declining share of global production. Accordingly, the U.S. Senate and House of Representatives have both passed bills aimed at incentivizing construction of new semiconductor manufacturing facilities in the U.S.

This report summarizes the views of selected experts on policy options to reduce semiconductor supply chain risks and help mitigate future shortages in the U.S.

GAO conducted a literature review and compiled a list of potential policy options across multiple areas of federal activity. GAO then selected and interviewed 17 experts, including industry executives, government officials, and knowledgeable representatives from academia and nonprofits. In the interviews, GAO asked the experts about their views on which of the policy options had the greatest potential to mitigate supply chain risks.

For more information, contact Candice Wright at (202) 512-6888 or

These startups seek to close the supply-and-demand gap for recycled plastics

Read the full story at GreenBiz.

Circular, launched in June and based in Palo Alto, California, is an online marketplace for buyers and sellers of post-consumer recycled plastic. Cirplus has been doing that since 2018 out of Hamburg, Germany. Circularise, founded in 2016 in The Hague, Netherlands, plays a different role, helping buyers and sellers to determine the origins and ingredients of a variety of materials, including recycled and renewable plastics, through its blockchain technology. In May the company announced that it is teaming up with plastic producer Neste.