How China Outmaneuvered the West to Control the EV Battery Industry

Next week: When we speak of batteries, we usually mean lithium-ion powered by nickel- or iron-led cathodes. But the yearslong metals shortage ahead of us means the industry must broaden its outlook beyond the usual metals. That's why I'm excited about the next Live Chat, in which I'll host Colin Wessells, CEO of Stanford spinoff Natron Energy, to discuss the past and future of sodium-ion batteries powered by Prussian blue cathodes. Register here for this July 21 event, to be held at noon ET. E-mail me directly if you’d like to invite a guest: [email protected]. 

In a decadelong binge, Chinese companies have secured large parts of the world’s supply of battery metals, established a near-monopoly on refining them and built factories to assemble most electric vehicle batteries. Their efforts continue: Ganfeng Lithium, already China’s biggest lithium producer, this week paid $960 million to buy Lithea, a big Argentine lithium brine company.

Now the U.S. and Europe are trying to catch up, but are woefully short of the battery know-how required to do so. The situation is so dire that the only solution may be to ask Chinese companies for help.

How did the West arrive at this juncture in one of the world’s most important technological races? Simply, China understood from the get-go that if it was to have a robust EV industry, it had to control the supply chain for automobiles and batteries. Chinese entrepreneurs took big risks, backed by an ambitious government leadership that set a broad industry road map and bankrolled the companies in ways big and small. Western mining, battery and automobile companies—and the policymakers in their governments—seemed oblivious that a battle was even under way. Tesla, the one Western player that grasped the stakes, found good commercial reason to court China—namely, access to the Chinese market—rather than try to lead a Western commercial offensive against it.