China-U.S Clashes Again: EV Battery War

In 2023, Build Your Dream (BYD) overtook Tesla as the top-selling electric car seller. In 2023, BYD claimed to have produced 3.02m new energy vehicles, beating the 1.84m cars that Tesla reported in the same year. However, the sales figures that BYD has suggested include battery-only and hybrid cars, which means that Tesla still retains its crown as the top producer of electric battery-only vehicles.

But this competition between Tesla and BYD is just a prelude to the bigger competition between the two powerhouses of the world - the U.S. and China -as both countries vie to dominate the EV landscape. Despite China's complete dominance over the EV battery market, U.S. remains undeterred and is trying everything in the book to regain its authority over the EV landscape. So can the U.S. catch up?”

China's global stronghold vs U.S innovation

Over the years, China has exerted total dominance over the entire EV landscape by controlling every component of the EV supply chain.

China’s control over the supply chain starts from the extraction stage. The EV battery contains three main components: electrolyte, anode, and cathode. These main components contain minerals like lithium, graphite, nickel, cobalt, and manganese.

These minerals are neither mined in China nor the U.S., but they are imported from countries such as Congo, Australia, and Indonesia. Chinese companies in recent times, have started to acquire ownership of mines around the world where these minerals exist, knowing very well that by taking over the production of these minerals, they would grant them the power to control the prices of these minerals.

U.S. on the other hand takes a very different approach. Over the years, the U.S. has invested huge sums of money to build its mines domestically while expanding its international relationships with countries. But this approach is flawed. First, its effort to erect more mines domestically not only requires a long time, but it has met with great resistance from both environmentalists and residents who don’t like the idea of having a mine built in their backyard. Furthermore, U.S. has realized that importing minerals from other countries would be useless unless they can process them locally.

Pulling further ahead

This brings us to the production phase. After the minerals are mined, they will need to be mined. This is the step where factories grind down raw materials and extract the desired minerals from it.

China is the global leader in the production of these components while the U.S. is left far in the dust. Having many years of experience under their belt has given China's dominance in this aspect because it has given them the knowledge and the ability to adjust to new technology, making U.S. job of catching up even less possible. China is also the world leader when it comes to the mining process of minerals, while the U.S. does little of this.

But in recent years, U.S. companies have turned to salvaging minerals from scraps and dead batteries as an alternative to mining for new materials. Ascend Elements is a U.S. startup company that produces engineered EV batteries from old and used batteries. The company claims that it could produce enough cathode precursor and active material to equip 250,000 EVs per year. So while recycling startups are among the most promising American battery suppliers, they are still no match to the output of factories in China.

Support from the Chinese government

But this dominance does not come through one day of hard work but through the hard work of pioneers who have laid a firm foundation for their future generations. This person goes by the name of Wan Gang.

Wan Gang, colloquially named "the Father of EV” has played a vital role in China’s dominance in the EV market. Throughout his time in office as the Minister of Science and Technology, he lobbied for greater subsidies from the Chinese government to support the EV movement. Through the policies that he has put in place, he has paved the way that would encourage the development of alternative fuel transport and would also later launch a vehicle program that would reshape the Chinese car industry.

Unfair competition

The dominant hand from the Chinese government has thus raised some concerns about whether the Chinese government's support of the EV industry is a form of unfair global competition. The European Commission President Ursula von Der Leyen also shared similar concerns when she declared in her State of the Union address on Sept 13 that Brussels will launch an investigation into EVs from China, saying that: “Global markets are now flooded with cheaper Chinese electric cars, and their prices are kept artificially low by huge state subsidies, which is distorting our market.”

Can the U.S. catch up??

Thus the million-dollar question remains: “Can the U.S. catch up?”. Unfortunately no, catching up seems like mission impossible given how far ahead China is. But what the U.S. can do is to clean up its supply chain so there could be more domestic production of these critical components. If not, it might one day find itself at the mercy of China for minerals to build its own EV batteries.