The Electric: How the Biden Administration Should Interpret the New Battery Law

Save the date: Automakers face a massive shortage of lithium this decade,  hobbling their plans to produce millions of electric vehicles. To discuss how the lithium mining industry is responding, I'm excited to host Eric Norris, president of lithium at Albemarle, the world's largest lithium producer, for the next Live Chat With The Electric, Nov. 1 at 11 am ET. Register here. Email me directly if you'd like to invite a guest: [email protected].

In a wallop of state-backed industrial policy unprecedented in modern U.S. history, the federal government has assembled a $135 billion pot of cash to establish an electric vehicle battery supply chain. But how precisely should it dole out the money? This week, we offer five principles the Biden Administration ought to observe in awarding the billions in credits.   

Almost since taking office, President Joe Biden has talked about batteries, seeing them as something of a cure-all for some of the country’s deepest woes: A vibrant U.S. electric vehicle and battery industry would create high-wage blue-collar jobs, Biden has suggested, giving an economic jolt to states and communities left out of prior economic booms. It would also deal a geopolitical blow to China, which dominates the battery industry, at the same time the U.S. is restricting China’s access to advanced computer chips. 

At the White House on Wednesday, Biden unveiled the first wave of $135 billion in federal funding meant to jump-start this U.S. battery industry: The administration announced 20 winners out of approximately 200 applicants for $2.8 billion in grants. Investors responded to the news, boosting the share price of silicon anode developer Amprius Technologies (winner of $50 million) 79% by the close of trading Friday; fast-charge battery developer Microvast Holdings ($200 million) 57%; and nickel miner Talon Metals ($114 million) 16%.

There was a clear logic to the awards: The Department of Energy was attempting to ensure that the U.S. has all the elements of the processing chain in which metal ore is turned into electrodes, with an emphasis on lithium and graphite—both essential to standard EV batteries. The awards were grouped largely in red states, an attempt to make this lurch to state-backed industrial development bipartisan. But officials also looked to the future, with awards for silicon and lithium-metal anodes, technologies not expected to be commercially available in EVs until 2025 or later. As with most investment portfolios, there were companies all but certain to deliver their projects as promised, like Albemarle, the world’s largest lithium producer, which received $150 million for a lithium processing plant; and riskier bets, like ICL-IP America, which received $197 million to produce lithium-iron-phosphate, a cathode chemistry it has never previously manufactured.