The Joe Biden administration stated it will provide $3.1 billion in funding to support domestic production of advanced batteries that will encourage electric vehicle adoption. Supporters of the funding feel the move will reduce volatility in world oil markets, particularly the rise in gas prices, caused in large part by the Russian invasion of Ukraine.
According to a statement by the Department of Energy, Biden’s administration will also set aside $60 million in grants for battery recycling initiatives it hopes will “reduce our dependence on competing nations like China, which have an advantage over the global supply chain.”
The announcement comes just a month after Biden said his administration would activate the Defense Production Act to secure sources of critical materials such as lithium, nickel, cobalt, graphite and manganese, all of which are used for EV batteries and energy storage.
Most of these minerals are processed in Asia today. If fact, China alone has controlled 80% of the world’s raw material refining, 77% of the world’s cell capacity, and 60% of the world’s component manufacturing due to its large domestic demand for batteries since 2020.
The $3.1 billion will be used to help U.S. companies build new factories and modernize existing ones to produce electric vehicle batteries and related parts. Tesla has been making batteries on American soil for years, but other American automakers, led by Ford and General Motors, are also investing billions of dollars to control the supply chain at home.
General Motors has formed a joint venture with LG Energy to produce battery cells in the US at various factories, and Ford is working with SK Innovation to do the same. LG also recently announced a $1.4 billion investment to build a battery plant in Arizona, though it hasn’t confirmed which automaker it will ship batteries to. Panasonic is looking at locations to build a factory in Oklahoma or Kansas, and Toyota is also targeting a US battery factory that should start production in 2025.