industrial policy – NAATBatt

Explaining U.S. Battery Strategy in Korea

Jim Greenberger — Sat, 08 Mar 2025 09:23:35 +0000

The NAATBatt Onshoring Battery Technology Committee recently sponsored a delegation of NAATBatt members at InterBattery 2025. The delegation included representatives of 39 NAATBatt member firms, which either attended the conference in person or virtually.

Participating members had the opportunity to attend InterBattery 2025, the second largest battery conference in Asia (after CIBF in Shenzhen, China) and meet a wide with a range of Asian battery and battery component manufacturers. The NAATBatt InterBattery program allowed members to interact directly with decision-makers at the large Korean battery companies. Those decision-makers tend to be located in Korea, not in North America. The Onshoring Battery Technology Committee’s InterBattery program gave NAATBatt members an opportunity to interact with those decision-makers in a way that North American battery trade shows do not.

InterBattery 2025 was also an opportunity for the NAATBatt Offshoring Battery Technology Committee to speak with Asian companies that might be considering opening or expanding operations in North America. The Onshoring Battery Technology Committee’s mission is to help companies from outside of North America more easily move operations to North America and connect with potential partners, suppliers and service providers within the NAATBatt membership.

NAATBatt also participated in the U.S. EV Forum organized by the U.S. Embassy in Seoul in connection with the InterBattery 2025 conference. A large number of Korean battery companies attended the forum, including representatives of the three major Korean battery manufacturers.

I was asked to make remarks at the Forum on behalf of NAATBatt. I sensed that the Korean battery companies were interested in what I had to say, particularly to the extent my remarks related to the battery policy of the new Trump Administration. As expected, the Korean battery industry does not know what to make of the major policy announcements related to trade and manufacturing, which seem to change rapidly and appear impossible to predict.

In my remarks I told the Korean audience that I could offer no clarity with respect to U.S. policies affecting battery production, including tariffs, the future of the Inflation Reduction Act or the survival chances of various battery manufacturing tax incentives. I offered the prediction, however, that the frenetic pace of announcements was likely to slow (if out of exhaustion, if nothing else) and a consistent policy toward manufacturing should soon emerge. That said, I told the Koreans that I cannot predict what that consistent, less frenetic policy is going to be.

I pointed out, however, that whatever the details of the ultimate government policy will be, the basic strategy that the United States, and its interest in attracting Korean manufacturers to the United States, is clear and unlikely to change. That strategy has three elements.

First, the United States needs to acquire know-how in advanced battery manufacturing, which it by and large does not have today. That know-how resides in Asia, much of it in Korea. The United States will continue to reach out to companies in Korea in order to incent them to share that knowledge with U.S. engineers and technicians. The transfer of know-how, however, will not be a one-way street. Korean companies should reasonable expect to share in the markets, culture of innovation and world-class research capabilities that U.S. companies and research institutions can provide to them. The transfer of know-how that the U.S. desires will require a partnership.

The second element of the U.S. strategy is the need to build North American battery manufacturing to scale. It is abundantly clear that the winners in the world-wide competition for dominance of the lithium battery and automotive markets will be those companies, and those countries, that can produce high-quality products at the lowest cost. The primacy of low cost in this competition is at this point beyond question.

Manufacturing batteries at the lowest possible cost involves many factors. But the one indispensable factor is that manufacturing must take place at scale. Without the ability to amortize the huge capital costs of manufacturing lithium batteries over very large-scale production, making the lowest cost lithium battery will be near to impossible.

China is a case in point. The Chinese lead the world today in battery manufacturing principally because they have leveraged the scale of the largest EV market in the world in order to reduce the cost of the lithium batteries their companies produce. This strategy has worked well for the Chinese. But here is a secret: As large as the Chinese auto market is, the combined potential EV markets in the United States, Europe, Japan and Korea are even larger. If those markets can somehow be consolidated, the United States, Europe, Japan and Korea can recapture the advantage of scale from the Chinese. But this too will require a partnership.

The third element is securing the supply chain for lithium battery materials and components. Back in the 1970’s, the United States became highly dependent upon a commodity (petroleum), which was largely controlled by a small number of foreign producers. The United States paid a heavy price for that dependence. Over following decades that dependence forced the U.S. to spend trillions of dollars to manage affairs in a part of the world might otherwise have had little interest to American policymakers. The United States will never let this happen again. But preventing its re-occurrence in the area of energy materials sector will require cooperation with nations in Asia that have, make or process the battery materials and components that the United States will need in the 21^st Century. This too will require a partnership between U.S. and Asian firms.

Lithium battery technology is one of the most critical technologies of the 21^st Century. It is becoming more critical by the day. Securing the U.S. economy’s ability to manufacture that technology profitably and securely is not something that the United States can do alone. It will require partnerships with allied nations in Asia. No government policies, however frenetic, will change this fundamental fact.

In Memory of Ralph J. Brodd

Jim Greenberger — Sat, 02 Mar 2024 03:11:22 +0000

Last month, the lithium battery industry lost another giant: Ralph J. Brodd. Ralph had not been active in the battery industry for several years. As a result his name may not be familiar to many who entered the industry during that time. But Ralph may be one of the most consequential figures in the history of advanced battery technology in the United States.

Ralph’s resume reads like a laundry list of positions and accomplishments. He was a past President of the Electrochemical Society. He was an advisor to most of the national laboratories working on advanced battery technology. He published more than 110 articles and was awarded five patents. And that barely scratches the surface. Yet he was also one of the kindest, most decent and most humble men you could ever hope to meet.

Ralph’s most enduring impact on U.S. industry grew out of his article “Factors Affecting U.S. Production Decisions: Why Are There No Volume Lithium-Ion Battery Manufactures in the United States?” published in December 2006. In that article, Ralph was the first to sound the alarm about the loss of lithium-ion battery manufacturing capability in the United States and the long-term consequences of that loss.

Over the past few years, federal and state governments have made unprecedented investments in electric vehicles and supply chain projects to try to help U.S. manufacturers and U.S. workers regain the lead in lithium-ion battery manufacturing. The revised Section 30D tax credit will inject about $7.5 billion of investment into U.S.-made electric vehicles. The Advanced Manufacturing Production Credit should generate tax credits of about $30.6 billion to U.S. manufacturers through 2031. An additional $13.8 billion of subsidies has been awarded by states and localities to at least 51 electric vehicle and lithium-ion battery plants. Every single one of those investments can trace its origin to Ralph Brodd and his 2006 article.

I first met Ralph in 2007. It was Ralph who convinced me to found NAATBatt in order to address the looming crisis of lithium battery technology in the United States. That effort in turn caught the attention of a first-term Senator from Illinois named Barack Obama. The rest is history.

Now Ralph belongs to history. He had more impact on it than many realize. Our sincere condolences to Dorothy and to the rest of the Brodd family. Ralph will be sorely missed.

The Importance of Consumer Incentives for Electric Vehicles

Jim Greenberger — Fri, 06 Aug 2021 16:43:55 +0000

On August 5, 2021, the White House announced that President Biden will sign an Executive Order that sets an ambitious new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles. President Biden was joined in the announcement by executives from General Motors, Ford and Stellantis, which have separately announced that 40%-50% of their vehicle sales will be electric by the end of this decade.

The elephant in the room, of course, is how do you make that happen? The even bigger elephant is how do you ensure that the batteries that power those vehicles will be made in the United States?

The White House announcement outlines four approaches:

Installing the first-ever national network of electric vehicle charging stations.
Delivering point-of-sale consumer incentives to spur U.S. manufacturing and union jobs.
Financing the retooling and expansion of the full domestic manufacturing supply chain.
Innovating the next generation of clean technologies to maintain our competitive edge.

All four approaches will be helpful. Installing vehicle charging stations will make electric vehicles more attractive to consumers by reducing range anxiety. This approach seems to have political support, as the Bipartisan Infrastructure Deal which seems to be working its way through Congress includes $7.5 billion in funding for this purpose.

Supporting innovation and the retooling of the full domestic manufacturing supply chain (presumably with government grants and loans) will also be helpful. But this approach risks falling into the ARRA trap of 2009-10, which invested a lot of public money into infrastructure that the market did not ultimately support.

The single most important thing the federal government can do to ensure U.S. leadership in critical advanced battery technology is to make sure that there is a vibrant, early market for that technology in the United States. For all the hand-wringing about Chinese leadership in battery manufacturing, it is worthwhile remembering that the Chinese did not get that leadership because they out-innovated or out-smarted the United States. The Chinese got and continue to hold that leadership because the Chinese government made sure that there was a vibrant, early market for advanced battery technology in China that only Chinese manufacturers could reliably access.

If the United States wants to gain leadership in advanced battery technology and manufacturing, it simply needs to do what the Chinese have done in China. There is no magic or complexity to the formula for success.

Unfortunately, incenting consumer purchases of electric vehicles and other advanced battery-powered technologies (approach #2 of the Biden Administration, summarized above) is the most politically problematic of all the approaches. American consumers are still largely skeptical of electric vehicle technology and the whole subject of vehicle electrification has become unfortunately politicized. As a consequence, the Bipartisan Infrastructure Deal does not contain any meaningful consumer incentives for electric vehicle procurement.

While it may be easy to blame Congress for failing to seize an opportunity, the reality is that Congress cannot get much ahead of its constituents. It falls to the battery industry, not Congress or the Administration, to explain to the American public why battery technology will be so important to their future and why buying advanced battery-powered technologies today is practical and makes sense. We as an industry need to re-double our public outreach efforts in the year ahead if we want to make meaningful consumer incentives for U.S.-made advanced batteries a reality.

The Challenge of Building a Lithium Battery Supply Chain in North America

Jim Greenberger — Fri, 28 May 2021 20:09:36 +0000

Good morning, ladies and gentlemen. Thank you for the invitation to speak this morning to the Hamilton Commission. My name is Jim Greenberger and I am the Executive Director and founder of NAATBatt International, the trade association of developers, manufacturers and users of advanced battery technology in North America. Since 2008, NAATBatt’s mission has been to promote the use and manufacture of advanced batteries in the United States and the growth of the good American jobs that manufacturing will create. Today, NAATBatt has 164 corporate and institutional members representing all elements of the advanced battery supply chain in North America.

I want to begin my remarks by addressing the basic question of why battery technology is important to the United States. In truth, it is not because of batteries. Battery technology has been known to mankind for more than 2,000 years. For most of those 2,000 years, battery technology was a curiosity, a facilitator of magic tricks. It was not until the invention of the lead acid battery in 1859 that batteries could generate enough electricity to power major mechanical processes.

We are here today because of another, more recent discovery: the lithium-ion battery, first commercialized in 1991. Lithium-ion batteries are high power batteries enabled by the fourth lightest element in the universe: lithium. Because of their relatively light weight and high-power density, lithium-ion batteries can provide electric power to a device located anywhere in space without the need of an electricity cord. The significance of lithium-ion batteries is that they make electric power portable in ways and at a scale that has never before been possible.

Portable electricity is the real story. Whereas 20^th Century technology was largely powered by heat-based fuels, 21^st Century technology will be powered by electricity. Don’t blame the battery. Computers, wifi and databases just don’t run very well on gasoline.

Many people believe that the move to electric vehicles is driven solely by concerns about climate change. That is not true, though reducing carbon emissions is a very nice side benefit. The electrification of vehicles has been going on for 50 years. It started with power locks and power windows, moved on to heated seats and navigation systems, and is now working its way into the vehicle drivetrain. Vehicles are simply becoming computers on wheels. It is the natural progression of 21^st Century technology.

Since the beginning of NAATBatt we have warned that “He who makes the batteries will one day make the cars.” That is a big deal considering that vehicle manufacturing employs about 1 million Americans and, when you consider indirect employment, it is the second largest employer of Americans after healthcare.

But even that undersells the importance of lithium batteries. We already know that lithium batteries will enable future cars, buses, drones, consumer devices, medical devices, monitoring systems, renewable energy systems, aircraft and high-power weapons systems. What we don’t know is what additional technologies and devices they will also power by 2040 and 2050.

Let me illustrate the potential with a question: What do the following five major U.S.-based companies have in common: Microsoft, Google, Facebook, Amazon and Apple? The answer: None of them makes semiconductors. Yet I will tell you to the point of virtual certainty that had U.S. companies, entrepreneurs and workers not dominated semiconductor and computer hardware manufacturing in the 1960’s, ‘70’s and 80’s, while all those companies might exist today, they would not have developed or be headquartered in the United States.

This is the challenge we face today with lithium-ion batteries. The difference is that unlike the semiconductor industry of the 1960’s, ‘70’s and 80’s, in lithium-ion battery manufacturing U.S. companies and U.S. workers are starting out 10 years behind our economic competitors and strategic rivals. We need to catch up, and we need to catch up quick.

Before I jump to my thoughts on how we can catch up and the challenges of the North American lithium-ion battery supply chain, I want to review briefly the basic components and structure of a lithium-ion battery.

The basic unit of a lithium-ion battery is the battery cell. The cell has two electrodes, one positive, one negative. The positive electrode is called the cathode. The negative electrode is called the anode. A cell produces electric power by moving electrons between the cathode and the anode. In moving between the two electrodes, the electrons travel through a liquid salt called an electrolyte. There is also a physical barrier between the cathode and the anode called a separator. The separator keeps the two electrodes from touching each other and shorting out the battery, but has properties that allow the electrons to pass through the separator uninhibited.

Of the four key elements of the battery cell—the cathode, anode, electrolyte and separator—the cathode, or positive electrode, is the most complicated and expensive part of the cell. The cathode consists of a number of different metal powders that are blended, shaped, and coated to the proprietary specifications of a battery cell makers based on what the cell maker wants the battery cell to do. The principal metals used in a lithium-ion battery cathode are lithium, nickel and cobalt. The cathode generally accounts for about 50% of the cost of the entire cell.

The anode, or negative electrode, is also a mix of metals that are mixed, shaped and coated to the proprietary specifications of the cell maker. Typical materials used in the anode are natural graphite, artificial graphite and silicon.

The electrolyte is generally a lithium-based salt that is dissolved in a solvent. Most electrolytes today are liquids and can be toxic and flammable. When you hear about solid state batteries, that generally refers to next generation batteries that will replace the liquid electrolyte with a solid electrolyte that solves the toxicity and flammability problems and enables the use of new anode materials that can make the battery more powerful.

Finally, the separator is a woven or non-woven material that is processed and coated in ways that are proprietary to each separator and cell manufacturer.

In a vehicle application, battery cells are strung together into units call modules. Modules are then assembled into larger units called battery packs. Battery packs include components such as battery management systems, which are essentially mini-computers that allow the cells within the pack to communicate with each other and with the vehicle. Battery packs also typically include thermal controls, which keep the cells cool and prevent fires. Light electric vehicles, such as passenger cars, generally contain one battery pack per vehicle. Battery packs are usually proprietary to the vehicle manufacturer and can very widely in shape, size and composition from vehicle model to vehicle model.

Electric vehicles are the largest users of lithium-ion batteries. It is estimated that by 2030, light vehicles, commercial vehicles, and buses will account for about 90% of the lithium-ion battery market.

So now that you are all experts in the importance of lithium-ion batteries and their components, let’s talk about the supply chain for lithium-ion batteries in the United States.

It will come as no surprise to any of you that the United States has fallen far behind Asian nations, in particular behind China, in the production of lithium-ion batteries and their components. The heart and soul of the lithium-ion battery supply chain is, of course, the lithium-ion battery cell. According to BloombergNEF, 78% of the global commissioned cell manufacturing capacity today is located in China.

As you move up the supply chain, into the component parts of the battery cell, the story is much the same. As I previously mentioned, the single most expensive and arguably most important part of the battery cell is its cathode, or positive electrode. Making cathode materials is a complicated chemical process. It is not just a matter of mixing metal powders into the right blend. You have to mix those powders in a correct environment, layered in a certain way, the particles must be of a certain size and shape, and in some cases the particles themselves must be coated. All of this must conform to the proprietary specification of the cathode makers who tend each to have close a relationship with a specific battery cell maker. Today, China, Japan and South Korea collectively account for about 94% of cathode materials manufacturing capacity worldwide.

Digging farther down into the supply chain of the metals that go into the cathode, it is a more complicated story, but one with the same unfortunate conclusion. In the mining of lithium, China, Australia and Chile account for 83% of the lithium mining nameplate capacity in the world. The United States accounts for less than 1%.

In cobalt, the Democratic Republic of the Congo accounts for 78% of all cobalt mining nameplate capacity in the world. Canada comes in at about 2%.

The supply of class 1 nickel, which is what is used in batteries, is somewhat less concentrated. Russia, China and Indonesia together account for about 37% of nameplate mining capacity, with Canada accounting for about 17% and the United States about 1%.

Recycling used battery cells can also contribute to the energy materials supply chain. But given the rate of growth in the electric vehicle market, which is starting at a near negligible base, and the long life of most lithium-ion vehicle batteries, it will be many years before battery recycling feedstocks are able to make a serious contribution to the upstream energy materials supply base.

The more pressing near-term bottleneck in the lithium-ion supply chain, however, is not in upstream energy materials as much as in the mid-stream refining of those materials into the processed chemicals that are used to make a battery cathode. Today, 61% of all lithium used in batteries is refined into lithium hydroxide or lithium carbonate in China. In cobalt, 72% of all cobalt refined into cobalt sulfates and oxides used in cathode material production is refined in China. The refining of nickel, which is used primarily in stainless steel, is a bit more widespread, with China and Russia accounting for about 37% of refining capacity while Canada, Japan, Australia and Europe collectively account for about 55% of capacity. The refiners of mined energy materials tend to have close relationships with individual makers of cathode materials.

For the sake of time, I will not go through the separate supply chains for anode materials, natural and synthetic graphite, silicon, electrolytes and battery management systems. But in all those areas, U.S. companies lag significantly behind their Asian competitors, some of which have been serving the battery market since the advent of the lithium-ion battery in 1991.

So why is it that the United States lags so far behind its competitors and trading partners in Asia, and increasingly behind its trading partners in Europe, in building out a lithium-ion battery supply chain? The answer is simple. I call it the “Willie Sutton Rule.” As you will recall, Willie Sutton was a bank robber in the 1920’s. When asked why he robbed banks, Willie thoughtfully replied “that is where the money is”.

The same is true in lithium-ion battery production. Cell manufacturing and the upstream battery supply chain will grow up where the batteries are, or where, more precisely, they are installed in vehicles. Battery cells are complex and heavy to transport. It makes economic sense to build them close to where the vehicles in which they will be installed are manufactured.

A little more than 10 years ago, China made a strategic decision to support the growth of a large electric vehicle industry in China, which it did using all the robust tools of a command economy. Up until last year, when it was surpassed by Europe, China was the largest market for electric vehicles in the world. There are more than 500,000 electric buses on the road in China today. In the United States there are just a few thousand. That is why China makes 78% of lithium-ion battery cells in the world. China has not out-competed the United States. It has just been where the money has been in lithium-ion batteries for the last 10 years.

There is no reason why a robust lithium-ion battery supply chain cannot be built in the United States. There have already been many announcements about new manufacturing projects and mineral extraction projects planned in anticipation of a growing electric vehicle market. All those projects need to be capitalized and move forward is a clear and consistent signal as to the timing of the electric vehicle market. That is what Chinese battery makers got from their government ten years ago. It is what European manufacturers and miners are getting from their governments today. Unfortunately, U.S. manufacturers have never gotten a consistent signal from their government as to when a real push into vehicle electrification is going to be made. If you need to invest a billion dollars or more in a plant or a mine, you really need that signal. Getting the timing wrong on when to make a major investment in a new technology is not a palatable option for most private companies.

So the good news is that if Congress and the Administration can send a clear and consistent signal to industry as to when vehicle electrification in the United States will be fully supported and encouraged, major investments will be made by the private sector and a robust lithium-ion supply chain will develop in the United States to service that demand. I am personally confident that there is little else the U.S. government will need to do, if the goal is simply to build a lithium-ion battery supply chain in the United States.

But commissions are not constituted to hear good news. Therefore, I want to honor your service by also giving you some bad news. The bad news is that if all we do is increase demand for electric vehicles in the United States without more, the resulting lithium-ion battery supply chain will have limited opportunities for U.S. companies, entrepreneurs, technology developers, and well-paid workers.

The reason for this is because the U.S. lithium-ion battery supply chain has a timing problem. The problem will impair the development of a domestic supply chain in two ways: First, even if we had certainty tomorrow about the size and timing of the electric vehicle market, it will take years to build out the lithium-ion battery supply chain businesses we need in the United States. A recent presentation by Benchmark Minerals Intelligence estimates that it takes 1 to 2 years to build a cell manufacturing plant, 2 to 3 years to build a cathode production plant, 3 to 5 years to build a plant dedicated to processing energy materials, and 5 to 25 years to open a lithium, nickel or cobalt mine.

So as the U.S. market for electric vehicles grows, we are going to be dependent upon foreign imports of materials and cells for the foreseeable future. The trick is how to allow the use of those imported materials without undercutting the business case for investing in their domestic production.

The second problem is that many of our foreign competitors, including China, Japan and especially Korea, are at least 10 years ahead of any U.S. company in lithium-ion battery cell manufacturing and its upstream supply chain businesses. This 10-year head start has given those companies manufacturing expertise in lithium-ion battery technology and, more importantly, an opportunity to grow to scale. That expertise and the cost advantages that come with scale will make it very difficult for start-up U.S. battery cell manufacturers to compete with those companies internationally or even, without some sort of assistance, in the U.S. market itself.

So the result of that 10 year head start is that if we build a lithium-ion battery supply chain in the United States today, it is likely to be dominated by foreign-owned multinational battery cell manufacturers. Those manufacturers have their own existing suppliers from whom they will either import battery components or bring those suppliers with them to the United States. Foreign battery cell manufacturers can be expected to use their own manufacturing engineers and scientists in order to protect their manufacturing know-how. They can also be expected to commercialize their own research and development in preference to research and development generated by U.S. companies and entrepreneurs. Foreign-based manufacturers will own any branding or spin-off technologies generated by their U.S. manufacturing operations.

So why is this a problem? After all, we will get a lot of new battery factories. Back in 1992, Stan Shih, the founder of Acer and now a director of TSMC, described graphically how value added varies across different stages of bringing a product to market. Mr. Shih suggested that the graph looks like a smile. The curve up the left cheek describes the significant value created by research and development of new technologies. The curve up the right cheek describes the significant value created by branding and sales and marketing. In between, the lowest part of the smile, is the value created by the process of fabrication. That value is significantly less than the value created at the cheeks.

What we are doing if we create a lithium-ion battery supply chain in the United States owned principally by foreign-owned multinational corporations is giving away the opportunity one day for American companies, entrepreneurs and workers to take advantage of the huge value creation opportunities on the cheeks of lithium-ion battery technology in exchange for assembly jobs. That is not to discount the value of assembly jobs to those that hold them. But, as Willie Sutton would say, that’s not where the money is.

The object of this commission should not be to figure out how to build a lithium-ion battery supply chain in the United States. That is going to happen anyway as soon as Americans start buying electric vehicles in large numbers. The object of this commission should instead be to figure out how America does not become to Asian battery manufacturers what Mexico is to the U.S. auto industry: a mere assembler of someone else’s products. That is a question worthy of your attention.

In conclusion, I would make four suggestions to this commission about how we can prevent that from happening:

First, focus first and most primarily on generating demand for electric vehicles in the United States. There is no more effective tool for building a supply chain than building predictable demand for a product that the chain will supply. NAATBatt is very excited about President Biden’s American Jobs Plan proposal to spend $174 billion on vehicle electrification in the United States. This demand-side approach to purchaser incentives is likely to be far more successful than the supply-side incentives for the battery industry which characterized the American Recovery and Reinvestment Act of 12 years ago.

Second, tie the purchaser incentives and government procurements to domestic battery manufacturing as much as possible and prudent. American taxpayer dollars should be used to support American manufacturers and American workers. Taxpayer-subsidized electric vehicles should have American-made batteries. Of course, defining what an American-made battery is will be the details in which the devil will live. But an intelligent definition that takes account of growing domestic battery supply chain capabilities over time is possible and warranted.

Third, we must encourage the development of domestic battery manufacturing champions. Domestic battery champions will be most likely to use domestic suppliers, engineers, scientists, sales managers and U.S.-developed battery technology. Encouraging the vertical integration of the lithium-ion battery supply chain, with U.S.-based vehicle manufacturers owning direct, controlling interests in battery cell manufacturers would in my view be optimal.

Fourth, to the extent that domestic battery champions will be foreign-owned multinational corporations, we need to find ways to encourage the U.S. domestication of many of their important business functions. This is not a novel challenge. The United States faced a similar challenge with Japanese auto companies back in the 1980’s. Today, companies such as Honda and Toyota are valued members of the U.S. automotive supply chain, employ many Americans in responsible and high-paying jobs, and conduct much of their research and development and sales and branding activities in the United States. We need to dust off our playbook from the 1980’s and see what in it may be applicable to the U.S. lithium-ion battery supply chain of 2021.

Thank you for your attention.

Why Batteries are Important to America

Jim Greenberger — Fri, 07 May 2021 14:37:01 +0000

Good afternoon. My name is Jim Greenberger and I am the Executive Director and founder of NAATBatt International, the trade association for developers, manufacturers and users of advanced battery technology in North America. Since 2008, NAATBatt’s mission has been to promote the manufacture of advanced batteries in the United States and the growth of the good American jobs that manufacturing will create. Today, NAATBatt has 162 corporate and institutional members representing all elements of the advanced battery supply chain.

I want to use my opening remarks to emphasize why battery technology is important to the United States. In truth, it is not because of the battery. Battery technology has been known to mankind for more than 2,000 years. For most of those 2,000 years, battery technology was a curiosity, a facilitator of magic tricks. It was not until the invention of the lead acid battery in 1859 that batteries could generate enough electricity to power major industrial processes.

We are here today because of another, more recent discovery: the lithium-ion battery, which was first commercialized in 1991. Lithium-ion batteries are high power batteries enabled by the fourth lightest element in the universe: lithium. Because of their relatively light weight and high-power density, lithium-ion batteries can provide electric power to a device located anywhere in space without the need of an electricity cord. The significance of lithium-ion batteries is that they make electric power portable in ways and at a scale that have never before been possible.

Portable electric power is the real story. Whereas 20^th Century technology was largely powered by heat-based fuels, 21^st Century technology will be powered by electricity. Don’t blame the battery for that. Computers, wifi and databases just don’t run very well on gasoline.

Since the beginning of NAATBatt we have warned that “he who makes the batteries will one day make the cars.” That is a big deal considering that vehicle manufacturing employs about 1 million Americans and, when you consider indirect employment, it is the second largest employer of Americans after healthcare.

But even that undersells the importance of lithium batteries. We already know that lithium batteries will enable future cars, buses, drones, consumer devices, medical devices, monitoring systems, renewable energy systems, aircraft and high-power weapons systems. What we don’t know is what other technologies they will also power in 2040 and 2050.

I will conclude my opening remarks with a question: What do the following five major U.S. companies have in common: Microsoft, Google, Facebook, Amazon and Apple? The answer: None of them make semiconductors. Yet I will tell you to the point of virtual certainty that had U.S. companies, entrepreneurs and workers not dominated semiconductor and computer hardware manufacturing in the 1960’s, ‘70’s and 80’s, while Microsoft, Google, Facebook, Amazon and Apple all might exist today, they would not have developed or be headquartered in the United States.

I will reserve my thoughts on how we can catch up and win in the competition for lithium battery technology for the general discussion. Thanks for your attention.

Are Lithium-Ion Batteries a Strategic Technology?

Jim Greenberger — Sat, 22 Feb 2020 04:42:56 +0000

One of the most interesting sessions during the NAATBatt 2020 annual meeting was the Industry Leaders Roundtable: How To Make the U.S. a Leader in Lithium-Ion Battery Manufacturing. The session featured a discussion among government and industry leaders in energy storage about what the United States might do better to support the domestic manufacturing of lithium-ion battery cells.

The panelists generally agreed on a number of points: that building a supply chain is important but building demand for the batteries may be more important; that the U.S. does not have the same tools to work with that China does; and that while the U.S. may not be a leader in lithium-ion battery manufacturing, some American companies are world leaders in other battery technologies, such as lead acid and zinc battery technologies, which should not be ignored.

But a more fundamental question underlies the topic the panelists discussed: Should the U.S. care whether it is a leader in lithium-ion battery manufacturing or not? In other words, is lithium-ion technology itself so strategic that the United States should invest public money to ensure that world-class lithium-ion battery manufacturing technology takes root in North America?

If the answer to that question is yes, it is so for two reasons. The first is that lithium-ion battery technology will be the key to controlling the auto industry of the 21^st Century. Automobile manufacturing is a major driver of the U.S. economy. Vehicle manufacturing directly or indirectly employs about one out of ten U.S. workers. Only the healthcare industry employs more. Loss of automobile manufacturing would be a huge blow to the American economy and to America’s economic position in the world.

During the industry leaders’ discussion session at NAATBatt 2020, the moderator asked the panelists: Is the following statement true: He who makes the batteries will one day make the cars. At least two panelists strongly opined that the statement was not true. American automakers, they argued, can partner with trusted foreign suppliers to obtain lithium-ion batteries. There is no need for U.S. companies to get into the battery business themselves.

I would respectfully but profoundly disagree.

Lithium-ion batteries are expensive and highly complex automotive components. Somewhere between 30-60% of the component value of future electric vehicles will be in the battery. The rise of autonomous drive technology might push that percentage down a bit. But lithium-ion batteries will still be the most complex and expensive components in the vehicles of the future.

While vehicle manufacturers can acquire lithium-ion batteries from trusted suppliers in the short term, the market is a highly competitive place. All companies, even trusted supplier/partners, naturally look for ways to capture higher-margin portions of the product supply chain. Manufacturing lithium-ion battery cells is and might always remain a low-margin business. But it is an ideal starting point for companies, and countries, looking to move into the higher margin businesses of vehicle assembly and consumer brand development.

In the 1980’s the U.S. computer hardware industry faced a similar issue. Japanese companies, with heavy government support, made a concerted effort to dominate the semi-conductor industry. Although semi-conductors were but one component of the mainframe systems that were the strategic business focus at the time, U.S. hardware companies recognized the threat that loss of control of that component to foreign manufacturers would pose.

In 1987, 14 U.S.-based semiconductor manufacturers came together to form SEMATECH. With about $500 million of funding from the U.S. government (and the leadership of NAATBatt’s own Sandy Kane), SEMATECH went on to make revolutionary advances in semiconductor manufacturing technology. Those advances ensured that U.S.-based companies such as IBM, AT&T, Intel, Hewlett-Packard and Texas Instruments, retained their leadership in semiconductor and computer hardware technology for well over a decade.

The historic significance and efficacy of SEMATECH is subject to debate. Contrarians point to Apple as an example of a company that eschews component manufacturing but maintains a secure leadership position in its business sector. But that argument ignores an important fact: Apple owns the key technologies within its devices. Offshore manufacturers only assemble the devices. Apple is successfully because it has maintained control of its critical technology while sending only low-margin assembly services offshore.

That is not what is happening in lithium-ion battery technology. The Asian companies that are assembling lithium-ion battery cells are investing heavily in lithium-ion research and development. Today the patent landscape in lithium-ion technology is dominated by the Asian companies making the batteries, not by the American auto companies hoping to partner with them as trusted suppliers.

Predicting the future is a risky business. But there is good reason to believe that he who makes the batteries will in fact one day make the cars. If that is the case, and 1 in 10 American workers depend upon vehicle manufacturing for their livelihoods, lithium-ion technology is about as strategic as technology gets.

The second reason why lithium-ion battery technology may be strategic is because of the nature of 21^st Century technology itself. The next thirty or forty years will see the rise of new technologies we may not yet conceive of but which may be as transformative to the 21^st Century as the personal computer and the cellular phone were to the 20^th. It is a good bet, however, that no matter what those new 21^st Century technologies may be, they will be powered by electricity and unattached to the grid.

The principal technology story of the 21^st Century is likely to be the rise of electric power. A huge variety of electrically powered devices operating at everything from high to ultralow voltage may well be what most significantly distinguishes 21^th Century technology from 20^th Century technology. All will share a single technological challenge: How to deliver electric power to the device as efficiently as possible.

The most significant feature of lithium-ion battery technology is that it is the most efficient way we know of to deliver electricity to a device in any particular point in space using the least possible mass and the lowest possible weight. Other electricity storage or energy generation technologies might one day prove more efficient. But as near we can tell lithium-based battery technology will be the most efficient way to deliver electricity to remote devices for at least the next thirty or forty years. What might come next is pure speculation.

If he who makes the batteries will be he who makes the cars, the same logic will apply to next-generation electrical devices. The sole consolation of losing the race to build automotive-grade lithium-ion batteries is that we know exactly what industry we stand to lose. As to what we stand to lose if foreign manufacturers use their expertise in lithium-ion battery technology to dominate the development and manufacture of next-generation electrical devices, we can only guess.

The United States has historically been adverse to industrial policy, trusting the free market to pick winners and losers over government bureaucrats. That approach has served the U.S. well. But every good rule allows for good exceptions. If lithium-ion technology is a strategic technology, and if other governments are actively pursuing its domination, the United States may have little choice but to play the same game.

China recognized the strategic importance of lithium-ion technology ten years ago. In ten years its companies have grown, with massive government support, from irrelevance to domination of the lithium-ion battery industry. Europe grasped the significance of lithium-ion technology belatedly but now seems waking to the challenge. Only the United States slumbers on, dreaming of partnerships with trusted suppliers. The history of business does not lend confidence to such dreams.

Testimony Before the U.S. China Economic and Security Review Commission

Jim Greenberger — Fri, 07 Jun 2019 21:34:52 +0000

On June 7, 2019, I had the privilege of testifying in Washington, D.C. before the U.S.-China Economic and Security Review Commission on the subject of China’s growing dominance of lithium-ion battery manufacturing. The written statement that accompanied my testimony is reproduced below:

Introduction

My name is James Greenberger and I am the Executive Director of NAATBatt International. NAATBatt is a trade association of advanced battery manufacturers and their supply chain partners doing business in North America. Today, NAATBatt has 110 corporate members, including major automobile manufacturers, electric utilities, equipment manufacturers, battery cell and pack manufacturers, chemical companies, energy materials suppliers and professional service firms. Our organizational mission is to support developments in the science of and markets for advanced electrochemical energy storage technology in North America consistent with the goals of enhancing energy efficiency, reducing petroleum dependence and enabling carbon-free electricity generation.

I apologize for the rough nature of these comments. I am a last minute substitute for NAATBatt’s Chairman Emeritus and Chief Technology Officer, Robert Galyen, who had originally been scheduled to testify today. Mr. Galyen, who also serves as the Chief Technology Officer of CATL, the largest lithium-ion battery manufacturer in the world based in Ningde, Fujian Province, China, has a unique perspective on Chinese capabilities and ambitions in advanced battery manufacturing. Mr. Galyen asked me to express his deep regret at being unable to be here today.

Of necessity, my remarks will focus a little less than Mr. Galyen’s would have on what is going on in China and a little more on the prospects for the U.S. advanced battery industry in light of the large and growing investment that China is making in lithium-ion battery technology. The views I express are my own and are not the official position of NAATBatt International.

The Importance of Battery Technology

Advanced battery technology, or more precisely the technology that stores and delivers energy to an electrical device in precise amounts, at precise times, and at precise locations, is and will continue to be one of the most important technologies of the 21^st Century. If the United States wants to remain a leading economic power, it is essential that U.S.-based companies master this technology and maintain leadership in its innovation, manufacture and deployment.

Advanced battery technology is a strategic technology in that it touches upon and provides spin-out opportunities into most of the other technologies that will shape human society in the 21st Century. Vehicle technology, stationary energy storage on the grid, consumer devices, implanted medical devices, drones, the Internet of Things, high energy weapons, electrified aircraft, ships and submersibles will all depend upon the ability to access electric energy at precise times and places that the traditional electricity grid cannot accommodate. In fact, battery technology sets the pace at which many of these other technologies can evolve and come to market. For example, Apple already knows what the iPhone XIV is going to do. It is just waiting for a battery light enough, powerful enough, durable enough and safe enough to power it. The same is true for other technologies such as rail guns, long duration drones and implanted medical devices. Because the battery is such a key factor in these technologies, the battery manufacturer will always have insight into them and the ability over time to enter into their markets.

An advanced battery also provides a substantial value-added component of the manufactured goods into which they are installed. In electric vehicles today, the battery pack accounts for roughly 40% of the vehicle cost. This percentage may fall as the cost of lithium-ion batteries decline. But it will remain a significant part of the overall vehicle bill of costs because the battery substantially simplifies and makes less expensive the balance of the vehicle. The ability to add substantial value to end products is an essential attribute of a manufacturing process that has the potential to provide high wages to its workers and high profits to its owners.

Battery manufacturing provides substantial backward linkages within its supply chain that help stimulate other industries. Manufacturing lithium-ion batteries requires base materials, such as lithium, nickel, copper, and cobalt, as well as the mixing, compounding and formation of those materials. It requires specialized manufacturing and testing machinery, monitoring devices, electrical control devices, software, adhesives, and metal working. Batteries lie at the end of a long and complex supply chain. Stimulate battery manufacturing and you stimulate a wide swath of advanced manufacturing in other industries.

Finally, the process of battery manufacturing involves a lot of “learning by doing”. Over the past 10 years, the price of lithium-ion batteries have fallen by about 80%. Almost none of that reduction has come from improvements in the chemical composition of lithium-ion batteries. The vast majority of the reduction has come from hundreds of small improvements made in the design of batteries on the manufacturing shop floor. That is not surprising. Economists increasingly recognize that the vast majority of technology innovations take place, not in a laboratory or classroom, but on a shop floor. Lose the shop floor and you lose an important opportunity to innovate.

Chinese Efforts to Dominate Advanced Battery Technology

China figured out the importance of advanced battery technology to its economic development more than 10 years ago and has been heavily investing in the sector ever since. Unlike the United States, which has a longstanding ideological discomfort with industrial policy (i.e., picking winners in the private sector), China’s innovation and investment in the lithium-ion battery industry has experienced strong support from Federal, Provincial and City governments through a variety of methods ranging from incentive programs, licensing programs, allocations in infrastructure development, to actively managing the battery industry.

In 2016 the Chinese National government issued what has come to be referred to as the “White List” of lithium-ion battery companies. This list is made up of entirely domestic cell manufacturers with more than 8GWh of installed capacity. No non-Chinese companies are included on this list. All electric vehicles sold in China must use cells and packs made by companies on the list or they will not be eligible for any incentives. This has forced out all non-Chinese manufacturers from the Chinese market.

But the primary focus of the Chinese government in its effort to support the manufacture of advanced batteries has been its support of market demand for the vehicles which are powered by lithium-ion batteries. Forbes reported that incentives for the production of electric buses propelled electric bus sales in China from just over 1,000 in 2011 to 132,000 units in 2016. Today there are over 400,000 electric buses in the road in China and more than 30 e-Bus manufacturers.

Purchase incentives for light electric vehicles, including cars, have been at least as aggressive. Forbes reports that based on an average subsidy of about $10,000 per vehicle, China’s central and local governments spent $7.7 billion on electric vehicle subsidies in 2017 alone. Assuming that current subsidies continue (though it is not clear that they will), Forbes estimates that subsidy payments would rise to approximately $20 billion in 2020 and $70 billion in 2025.

China’s efforts to corner the market on lithium-ion battery manufacturing have been largely successful. Today, approximately 75% of all lithium-ion batteries made worldwide are manufactured in China.

China’s success in capturing lithium-ion battery manufacturing stands in unfortunately contrast to the largely unsuccessful efforts of the Obama Administration to promote lithium-ion battery manufacturing for electric vehicles in the United States. Although the American Recovery and Reinvestment Act of 2009 invested more than $2 billion in domestic battery manufacturing, few if any of the funded projects were commercially successful. With the exception of the Tesla/Panasonic Gigafactory in Nevada, no large scale manufacturing of automotive lithium-ion batteries takes place in the United States today. China’s demand-pull approach has proven more successful than the limited supply-push initiatives in the United States.

Policy Recommendations

China and its success in lithium-ion battery manufacturing should not be viewed as a threat. The United States should endeavor to learn from the Chinese experience and to employ some of the same tools that China has used successfully to build its own advanced battery industry. Some possible policies would be the following:

Procurement of Public Electric Vehicles for Mass Transit. The United States should establish a substantial and well-financed “Procure for Innovation” policy. First priority should be the purchase of electric buses for public transport and of light, medium and heavy vehicles for use by public bodies. Today, almost all procurement decisions in the public sector are driven by price, which generally drives purchasers to non-electric vehicles. This makes sense from the standpoint of the locality or agency doing the purchasing. But it is counter-productive on a national level. A robust investment in public electric vehicles, coupled with strict local content requirements that support the development of lithium-ion battery production in the United States, would return to the public treasury in the long run many times the additional expense of acquiring electric buses and other public vehicles today.
Continue and Expand EV Purchaser Incentives. The United States should double-down on its investment in tax subsidies and other purchaser incentives for private electric vehicles. Any such subsidies should be conditioned on strict domestic content requirements for the battery technology contained in the vehicle. The local content requirement must be carefully specified. It is not just a matter of mandating U.S.-made steel. The battery technology and battery components should be largely of domestic origin. Also, Congress should consider enacting a special funding mechanism to expand existing purchaser incentive programs. A small user fee charged to purchasers of electric vehicles starting in 2028 could be sold to raise funds for the near-term payment of additional purchaser incentives. The fee would end up paying for itself if an increased market for electric vehicles in the short term helps improve battery technology and lowers the cost of electric vehicles during the period in which the fee is charged. Public investments in vehicle electrification are really investments in infrastructure. They can be financed through user fees, in much the same way that toll roads are financed.
Use Public Subsidies to Push the Envelope on Battery Technology. Any “Procure for Innovation” policy and EV purchaser incentives should be structured to encourage battery manufacturers to push the envelope of battery technology. The availability of public procurements and private purchasing subsidies should depend on the vehicle battery being “state of the art” and addressing specific areas of concern in battery technology, such as energy density, safety, ease of second use and recyclability. These requirements can be staged over time to push manufacturers to innovate, just as is done with fuel economy standards in ICE vehicles today.
Learn from Foreign Battery Manufacturers. Foreign-based battery manufacturers should be encouraged to locate in the United States and have access to the U.S. market, provided that American workers have the opportunity to learn from the battery manufacturing technology they bring. Foreign-based companies building battery plants in the United States should be required to use some minimum percentage of local suppliers, engineers and manufacturing technology in their factories and products. The opportunity for American workers to “learn by doing” must be jealously protected as a matter of public policy.
Focus Long-Term Research on Disruptive Battery Technologies. China’s decision to make a massive investment in lithium-ion technology was motivated in part by its desire to compete with more established Western vehicle manufacturers by disrupting the internal combustion engine technology that those Western manufacturers dominate. Having made that investment, however, China is now itself vulnerable to a competitor that can disrupt lithium-ion technology with a better energy storage or energy generation technology. Lithium-ion chemistry is unlikely to be the last word in battery technology. New and better technologies will replace it in time. The United States should focus its public research dollars on finding and commercializing that next generation energy storage/generation technology.

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