Why China is winning the EV war

Summary

Ford Motors faced challenges in selling their electric F-150 Lightning due to high costs, reflecting a broader issue with the affordability of EVs in the US. Chinese company CATL's battery technology, integral to EV affordability, became entangled in US-China trade tensions. China's dominance in the EV battery market stems from substantial government support and control over the supply chain, leading to innovations like the LFP battery. As the US seeks to bolster its own battery industry, it grapples with the dilemma of balancing competition with China and the urgent need for affordable, widespread EV adoption.

Takeaways

• 🚚 Ford Motors reduced production of their electric F-150 Lightning due to lower sales, partly because it's more expensive than the gas-powered version.
• 💰 The high average price of new EVs in the US, around $55,000, makes them less accessible to many consumers, hindering the adoption of EVs which is crucial for climate goals.
• 🔋 Batteries account for approximately 40% of the production cost of an electric vehicle, highlighting the significance of battery cost in the overall price of EVs.
• 🏭 Ford considered building a new battery plant in Virginia or Michigan to reduce costs, but faced political resistance due to the technology's origin from CATL, a Chinese company.
• 🌏 The US-China trade war has affected the EV industry, as China dominates the global EV market, making up over half of all EV sales worldwide.
• 🇨🇳 Chinese companies lead in EV battery production due to substantial government support aimed at energy independence and reducing air pollution.
• 💼 The Chinese government provided $29 billion in subsidies, research funding, and tax breaks to the EV industry from 2009 to 2022 to foster growth.
• 🚌 Local governments in China created an instant market for EVs by contracting companies to electrify public transport like buses and taxis.
• 🛑 The Chinese government set strict battery standards, requiring high energy density to qualify for subsidies, which spurred technological advancements.
• ⛏ Chinese companies control significant portions of the global supply of battery minerals by acquiring stakes in mines and dominating the refining process.
• 🔬 Chinese battery companies are at the forefront of innovation, developing technologies like lithium iron phosphate (LFP) batteries, which avoid expensive minerals and offer fast charging capabilities.
• 🌐 Despite concerns about unfair competition and environmental impacts, the global EV transition is heavily reliant on Chinese battery technology, with no immediate viable alternatives.

Q & A

Why did Ford Motors reduce the production of their F-150 Lightning in 2024?

Ford Motors reduced the production of the F-150 Lightning in 2024 because sales had tanked, partly due to its higher cost compared to its gas-powered counterpart.

What is the average price of a new electric vehicle (EV) in the US, and why is this a challenge for EV adoption?

The average price of a new EV in the US is about $55,000, making them hard to sell for most US consumers, especially during a time when widespread EV adoption is critical for climate goals.

What percentage of the cost to produce an electric vehicle is attributed to the battery, and why is this significant?

Roughly 40% of the cost to produce an electric vehicle is in the battery. This is significant because it highlights the need for cost reduction in this component to make EVs more affordable.

Why was Ford considering a new battery plant in Virginia or Michigan in 2023?

Ford was considering a new battery plant in Virginia or Michigan in 2023 to help lower its costs, which would make electric vehicles more affordable and competitive in the market.

What is the connection between the battery technology Ford was considering and the company CATL?

The battery technology Ford was considering was from CATL, a company based in Fujian Province, China, which is the largest battery maker in the world.

Why did Virginia's governor reject the battery plant proposal?

Virginia's governor rejected the battery plant proposal due to its links to China and concerns that the company is influenced, if not controlled, by the Chinese Communist Party.

How has China's dominance in the electric vehicle market impacted the global EV industry?

China's dominance in the electric vehicle market has led to the rise of affordable and high-quality EVs globally. China accounts for over half of all EV sales worldwide and has significantly influenced the development and supply of EV batteries.

What role did the Chinese government play in the development of the EV battery industry?

The Chinese government provided substantial support to the EV industry, including subsidies, cheap land leases, loans, and tax breaks, which helped Chinese companies develop leading EV battery technology.

How did China's early adoption of stricter battery standards affect the EV industry?

By introducing stricter standards for battery density, the Chinese government encouraged the development of higher-quality batteries, which in turn fueled the growth and innovation within the EV industry.

What is the significance of the lithium-ion battery and its components in the EV industry?

The lithium-ion battery is the most common type used in electric vehicles, with the cathode, anode, electrolyte, and separator being its main components. Control over these components and their supply chain is crucial for the production and innovation of EV batteries.

How has China's control over the battery supply chain influenced the global market?

China's control over the battery supply chain, from mining to manufacturing, has allowed it to dominate the market and lead in battery innovation, making it difficult for other countries to compete without relying on Chinese technology and resources.

What is the significance of CATL's LFP battery technology and its impact on the EV market?

CATL's LFP battery technology allows for longer driving ranges with faster charging times, which is a significant advancement in EV battery capabilities. This has made LFP batteries a growing share of the EV market, with nearly all of them manufactured in China.

What challenges does the US face in developing its own battery industry to support its EV goals?

The US faces significant investment challenges, estimated at $82 billion by Bloomberg, to build up its battery industry to meet domestic demand by 2030. Additionally, there are concerns about unfair competition, human rights, and environmental issues associated with China's battery supply chain.

How did Ford eventually resolve the issue of finding a site for its CATL battery plant?

Ford resolved the issue by finding a site for its CATL battery plant in Marshall, Michigan. This decision has triggered a US House investigation but represents a step towards establishing the first LFP plant in the US.