Perhaps you've heard that batteries are in short supply. On Monday, the Biden administration announced that it plans to remedy the ongoing shortfall by providing nearly $3.2 billion in funding devoted to domestic lithium-ion battery manufacturing, processing and recycling.
“This funding announcement will punch above its weight in not only accelerating the transition to a clean transportation future, but also in securing one of the most important supply chains in the U.S. economy,” Brian Deese, director of the National Economic Council, told reporters.
Most of the advanced batteries that U.S. electric vehicle manufacturers rely on come from outside of the country, with China being a major supplier. This is largely because the U.S. is still lacking a cradle-to-grave battery supply chain, prompting concern that it could become dependent on foreign sources for the long haul. As the wild ride of nickel due to the Russian war against Ukraine shows, that could create a disaster if the supply chain gets too concentrated.
The nearly $3.2 billion in funding — which comes courtesy of the bipartisan infrastructure law passed last year — will be doled out in the form of cost-share grants to private U.S. companies, and require companies to match the federal funds. The minimum grant will be $50 million for existing plants and $100 million for new plants. The White House expects to fund anywhere from 16 to 30 grants in this initial round.
The infrastructure bill also included $7.5 billion for electric vehicle chargers, $5 billion for electric transit buses and $5 billion for clean and electric school buses. All of this money is essentially seed funding for kickstarting a real EV revolution, with the administration setting a goal of 50% of all vehicles sold in the U.S. being electric by 2030.
Deese said that Biden has prioritized the battery supply chain as a part of the administration’s comprehensive review of supply chains over the last year, in part because automakers have had to rely on “uncertain and unreliable” offshore suppliers.
The initial round of funding will not be directed to mining or extraction, though Mitch Landrieu, the White House’s senior adviser responsible for coordinating the law’s implementation, said in a press conference that “we need responsible and sustainable domestic sourcing of the critical materials used to make lithium-ion batteries such as lithium, cobalt, nickel and graphite.” In late March, President Joe Biden invoked the Defense Production Act to increase the country's output of these minerals, requiring companies to prioritize federal rather than foreign contracts.
These steps come as demand for EVs surges at the same time as gas prices skyrocket. Snarled supply chains have added another layer of challenges. While the more than $3 billion won't immediately fix these issues, it could help smooth what has so far been a bumpy transition.