Representatives from more than 50 companies and government agencies participated in the forum.  The participants represented the entire breadth of the lithium battery supply chain in the United States.  Avicenne Energy US and Ricardo Strategic Consulting North America led and facilitated the various forum sessions.

The forum has not yet published its final report.  That report will be subject to further discussion and debate among the forum’s participants.  I hope to be able to announce the publication of a final report in this column within the next few weeks.

The principal take-away for me from the forum is that there is an appetite in both industry and government for some sort of track and trace scheme for high capacity lithium batteries in the United States.  It is unclear whether the scheme should be mandatory or optional, or possibly both.  But the forum identified four categories of value that a track and trace scheme could create that might justify the cost of its creation.

The first value is the creation of measurable data that will allow the government and those in industry to understand better the state and stability of the lithium battery supply chain.  This data is already needed to evidence qualification for Section 30D tax credits.  But the data collected has an even more important utility.  To truly understand a supply chain, you must be able to measure it.  And to protect and build a supply chain, you have to fully understand it.  China launched just such an initiative in January of this year.  The Industrial Internet Identification and Analysis System ‘Thorough’ Action Plan (2024-2026), sometimes referred to as the 3-3-1 strategy, seeks to enable precise network coordination across systems, enterprises and regions through the collection of track and trace data.  The United States needs a similar resource.

The second value is increasing the efficiency of lithium battery supply chain by lowering data collection costs.  Most if not all of the major vehicle OEM’s already collect track and trace data in order to understand their own supply chains.  But they collect it in different ways and disclose it, if at all, in different formats.  These different data formats require suppliers and downstream users of battery materials to be able to work in and master multiple different formats of battery data.  This increases cost and often results in certain downstream users (e.g., recyclers) not being able efficiently to get the information they need.  Having battery data reported consistently throughout the supply chain would reduce system costs and ultimately reduce the cost of batteries.

The third value is reliable and consistent reporting of battery state of health to consumers.  Vehicle OEM’s and battery manufacturers already have the ability to judge battery state of health and report it to consumers.  Providing that information to consumers is a good business opportunity.  But there is no way that consumers can really compare battery state of health across different brands and battery systems.  It is important to consumers buying a vehicle that they be able to compare apples to apples.  There is, perhaps, a role for government to play in facilitating that ability to compare.

Finally, there may be a role for government to play in facilitating the communication of ESG information from vehicle and battery makers to consumers.  A large part of the EU’s Battery Passport is devoted to collecting information on carbon content, responsible sourcing, recycled content and other ESG topics, which the EU uses to establish minimum requirement for manufacturers to sell high capacity batteries in the EU.  Among the industry participants in the forum, there was not much enthusiasm for making minimum standards of ESG compliance a requirement to sell batteries or vehicles in the United States.  But there was a recognition that there might be value in providing that information to consumers on a consistent basis across brands, allowing consumers to compare apples to apples.  It was noted that there might be benefit to adopting the ESG measurement systems already developed by the EU in its Battery Passport systems in the United States, albeit on a voluntary basis, rather than reinventing the ESG wheel.

Li-Bridge will work to finalize its recommendations with respect to tracking and tracing battery data.  Those recommendations will then be considered by government regulators and policy makers, who will ultimately control what track and trace scheme for batteries the United States eventually adopts.

In developing a final battery track and trace scheme, however, it will be important to proceed with caution.  There is a lot of very interesting data that can be collected from batteries.  And there are a lot of very cool ways to collect it.  As such there will be no shortage of advocates for battery data collection.

We need to keep in mind, however, that data itself is not an asset.  It is a cost.  How you use data is what can make it an asset.  In deciding what battery data to collect and how, regulators and policy makers must be very careful to make sure that the value of how we use the data collected always exceeds the cost of its collection.  This will require a highly disciplined approach to developing a suitable track and trace scheme for lithium batteries 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.

Although the restriction of Chinese graphite may cause a short-term disruption in the supply of battery-grade graphite in North America, that restriction may be a long-term blessing.  The real threat is not that the Chinese will continue to restrict their export of graphite.  Rather it is that the Chinese will soon change their minds (as they have in the past with export restrictions) and flood the North American market with graphite.  That flood would predictably bankrupt any North American company that makes a major investment today in the graphite market.  The resulting paralysis of domestic graphite investment is the real threat.

As I have often said at NAATBatt meetings, every business has two problems:  a balance sheet problem and an income statement problem.  The government is great at helping businesses solve their balance sheet problems.  A large grant or large loan does wonders for a company’s asset value.  But companies cannot survive long-term unless they can use those assets, whether government-funded or not, to produce repeatable income and profits.  Here the government has been of less assistance.

The restriction of Chinese graphite exports should be a call to action.  But the action should not be the government spending more money to build domestic graphite plants.  The focus should instead be on ensuring a floor price for battery-grade graphite made in North America that cannot be undercut by the Chinese or by anyone else.  If American industry had that assurance, it could do what it needs to do to build a sustainable supply of battery-grade graphite in North America.  And it could probably do it in short order.  All the government would need to do is get out of the way.

The Chinese graphite export restrictions are part of an ongoing tit-for-tat battle over trade policy between China and much of the developed world.  That battle is regrettable.  But this particular battle is well-timed in that it has not occurred during a time of crisis.  North America has the ability, the resources and the know-how necessary to meet this challenge.  Let us resolve to look back on this event in two or three years and thank the Chinese Ministry of Commerce for spurring us action.

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.

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 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.

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.

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.

By the standards of expectation, the meeting was a great success.  NAATBatt 2021 managed to incorporate the usual high-quality content of past NAATBatt annual meetings despite the disadvantage of its virtual format.  Most remarkable was the success of the networking sessions:  the on-line breakfast table discussions and the meeting and greet sessions.  Those proved immensely popular, proving that interactive sessions can work even in large virtual meetings and that good, productive conversations can still be had among participants.

The theme of the NAATBatt 2021 meeting was promoting the development of an advanced battery industry in North America, with an emphasis on lithium-ion battery manufacturing.  Several panels and discussion groups covered that topic.  It was clear that most all meeting participants had a clear understanding of the importance of developing a lithium-ion battery supply chain in North America.  The important question is:  How exactly do you do that?

Based on the conversations and content at NAATBatt 2021, I suggest a three-part plan to develop a robust lithium-ion battery manufacturing industry in North America.  I would emphasize that the following is not the official position of NAATBatt International.  It is only the musings of its Executive Director:

Increase Domestic Demand

The first and most important part of the plan is to ensure high demand for products powered by lithium-ion batteries in North America.  It is pointless, and even arrogant, to talk about building an advanced battery industry and supply chain in North America if demand for lithium-ion batteries is centered off-shore.  There are few examples in modern history first-world countries building new industries supported primarily by export markets.  What few examples there are owe their success in large part to U.S. geopolitical considerations.  To grow a domestic battery industry, the domestic industry must have domestic battery customers.

Since approximately 90% of demand for lithium-ion batteries is expected to come from electric vehicles, any significant domestic demand for batteries will be from the transportation sector.  Demand for electric vehicles can only come from two types of customers:  public sector customers and private consumers.

Public sector procurement of electric vehicle fleets is the most direct way the government can build a market for domestic battery production.  The U.S. government operates the largest civilian fleet in the world with more than 640,000 vehicles as reported in the Federal Fleet Report (2015).  In addition, as of January 2018, there were 66,116 transit buses, 69,316 demand response commuter vehicles and 15,670 transit vans deployed in the United States, the large majority owned by public agencies.  Converting a sizable portion of the replacement vehicles for these fleets to electric drive each year would create a significant domestic market for lithium-ion batteries.

Incenting private consumer and commercial purchases of electric vehicles is the second way of promoting lithium-ion battery demand.  The Section 30D tax credit for new qualified plug-in electric drive motors vehicles is old news and should be extended.  But other effective financial incentives can be brought to bear.  One take-away from NAATBatt 2021 is that electric vehicle makers (primarily bus and heavy-duty vehicle manufacturers) are increasingly looking to battery leasing business models in order to relieve themselves of warranty responsibility for the batteries and to lower the initial capital cost of vehicles to their customers.  Permitting accelerated depreciation for vehicle batteries and other tax incentives for battery owners could help reduce the cost of electric drive for commercial fleets and consumers.  Importantly, these tax incentives should only be available for domestically manufactured batteries.

Substantial thought must also be given to non-economic incentives.  For example, in many urban areas electric vehicles have priority access to high-occupancy vehicles lanes.  The federal government should consider mandating that same priority access on all federally-funded highways.

All around the world, governments realize that the race for electric drive is not just about a race for a better environment.  It is about a race for dominance of many of the technologies that will shape the economies and workforces of the 21^st Century.  For the United States even to be competitive in that race, there must be a robust market for lithium-ion batteries and the electric vehicles they power in North America.

Stand Up National Battery Champions

The second part of the plan is for the U.S. government to stand up one or two national champions in the large-scale lithium-ion battery fabrication business.

As I have written in this column before, the structure of the advanced battery industry is such that the fabricators of lithium-ion battery cells control much of the rest of the supply chain.  The cell fabricator determines whose electrode materials are used, whose separator is used, whose manufacturing and testing equipment is purchased, and whose R&D is commercialized.  Most of the social and employment benefits of advanced battery manufacturing are associated with those other enterprises and not with the fabricator itself.

The conundrum of lithium-ion battery manufacturing is that although the cell fabricator gets to choose the suppliers who will garner most of the social and employment benefits of battery manufacturing, the business of cell fabrication itself is a lousy economic proposition.  Cell fabrication involves huge capital costs, wafer-thin margins and the assumption of large warranty liabilities.  Every major North American company that has looked at getting into the business of high-volume lithium-ion battery cell manufacturing over the last twelve years has taken a pass on the opportunity.  And for good reason.  The only reason Asian companies have entered the cell fabrication business is because their governments understand the larger social benefits that accrue from those companies fabricating cells.  The EU has done the same analysis and is proceeding down the same path.

A robust supply chain of lithium-ion battery production—including energy materials production and refining, electrode production, manufacturing and testing equipment production, and battery R&D—will only grow up in North America if there are one or more national champion cell fabricators willing to buy those products.  To stand those national champion fabricators up the government needs to do two things:  ensure that the fabricators will have a guaranteed, large scale customer for their cells and backstop any losses the champion companies might suffer as a consequence of being forced into the lousy cell fabrication business.

National battery fabrication champions will, of course, need to be true national champions.  Although foreign technology assistance may be needed in the short term, the national champions will need to take direct responsibility for cell manufacturing.   Under no circumstance can a national champion be allowed to lay off its manufacturing responsibilities onto a joint venture in which U.S. employees cannot even go into certain parts of the manufacturing plant.  Lithium-ion cell fabrication is a know-how business.  Critical to the success of the plan is insuring access of U.S. employees and engineers to battery cell fabrication know-how.

Who those national champions should be and what the nature of the economic backstop should be are questions beyond the scope of this article.  But neither should be difficult to figure out.

Fund a Next Generation Manufacturing Consortium

The third part of the plan is to establish and fund a national consortium to develop next generation manufacturing technologies for lithium-based batteries.

At NAATBatt 2021, Chloe Holzinger of IHS Markit showed a simple but insightful slide illustrating the principal drivers of battery cost reduction.  Basically, battery cost reduction is a function of three factors: decreasing material costs, decreasing manufacturing costs and increasing the energy density of the battery.  Ms. Holzinger’s slide begs the question:  Among materials costs, manufacturing costs and energy density improvements, which represents the best opportunity for reducing the battery cost?

Long term cost reductions in basic energy materials seem unlikely.  As several speakers warned, increasing demand for lithium-ion batteries is likely to put substantial price pressure on energy materials, including lithium, Class I nickel and cobalt.

Improvements in battery energy density are certainly possible.  This is the sexy part of the battery business.  Investors are sinking billions of dollars into solid state technology, improved silicon anodes, high voltage electrolytes and a variety of other technologies intended to improve the energy density of cells.  Some will succeed.  But speakers at NAATBatt 2021 were in general agreement that there are no breakthroughs on the horizon that are likely to improve dramatically the energy density and overall performance of today’s lithium-ion battery technology.

That leaves battery manufacturing technology.  As NAATBatt’s CTO, Bob Galyen, pointed out, the basic roll-to-roll process of fabricating battery cells and batch processing of energy materials, while subject to continuous refinement, is more than half a century old.  Current lithium-ion battery manufacturing processes are by their nature inefficient, consuming large amounts of heat, space and time.  Incumbent battery manufacturers have invested billions of dollars in current manufacturing technologies.  Those investments are sunk costs, which have not been amortized.  Accordingly, incumbent manufacturers have little incentive to invest in expensive new manufacturing technologies.

In short, battery manufacturing technology is ripe for disruption.

In 2008, NAATBatt advocated the formation of a national consortium, based on the example of Semitech in the semiconductor industry, to study and improve the manufacture of lithium-ion batteries in the United States.  It is time to dust off and reconsider that proposal.

A national battery manufacturing consortium would study and develop next generation tools for manufacturing lithium-based battery cells at scale.  The consortium would license and test manufacturing technologies from multiple North American-based companies.  It would also draw on the expertise of U.S. semiconductor manufacturers, as next generation electrode printing technologies could draw heavily on manufacturing processes developed in the semiconductor industry.

It is worth noting that while the European Commission’s recent approval of $3.5 billion in subsidies for European battery supply chain companies threatens to leave their potential North American competitors behind, none of those subsidies appear directed towards developing next generation manufacturing technology.  Advanced semiconductor manufacturing technology is also not an area in which China has world-leading expertise.

A North American battery manufacturing consortium would be expensive.  Capital costs for battery cell manufacturing equipment are very large, just as in the semiconductor industry.  But the consortium could generate revenue to offset its cost to the government by toll manufacturing battery cells for North American battery companies serving smaller markets.  This would be an important resource for battery consumers in North America, most particularly for the U.S. Department of Defense, which has a critical shortage of domestically-manufactured lithium-ion batteries.

Establishing a consortium to develop next generation manufacturing technology for lithium-based batteries is the third part of an advanced battery industry plan for North America.  While this is the longest-term part of the plan, it is the part that may one day make North American companies and workers leaders in the advanced battery industry rather than just consumers of other nations’ superior technologies.

Where those batteries are made and who makes them matters.  Ensuring adequate supplies of lithium-ion batteries will be an important national security issue.  Lithium-ion batteries are also an important tool in the fight to reduce greenhouse gas emissions.  But most importantly, lithium-ion batteries and the technologies they enable are likely to create substantial wealth and many jobs in the 21^st Century.  Nations around the world are already competing to see which can best capture this important economic development opportunity.

The importance of developing a lithium-ion supply chain in North America is widely acknowledged.  But what that actually means is a bit unclear.  For example, a bill of materials for a completed automotive lithium-ion battery pack would list thousands of items.  Few would argue that all those items need to be made in North America.  Instead, the North American supply chain discussion should focus on those elements of the supply chain that are strategic.

But what does it mean to be a strategic part of the North American lithium-ion battery supply chain?  The answer lies what we want a domestic lithium-ion supply chain to do.  While energy security and environmental responsibility are important reasons to develop a domestic source of lithium-ion battery supply, the principal reason for building up a domestic supply chain is economic.  It is a way to generate new wealth and new jobs.  It is also necessary to preserve jobs in existing industries, such as the automobile industry, that may well be lost to foreign competition in the absence of domestic lithium-ion battery expertise.

So the measure of something being strategic in the lithium-ion battery supply chain is whether that something is an important driver of wealth and job creation.  Unfortunately, identifying those strategic elements is complicated in the lithium-ion world.

In 1992 Stan Shih, the founder of Acer Inc., proposed something called the “smile curve” as a way of explaining where value is created across different stages of product development.  According to Mr. Shih, the highest values are created in the first stages (technology creation) and last stages (consumer branding) of the product cycle, while the middle stage (fabrication) creates the least.  It is called a “smile curve” because if you plot these stages of development on a graph against value created, you get a smile.

Apple is an example of a business based on the smile cure.  Apple tightly controls the development of the technology that goes into its iPhones and the branding and sale of those phones to consumers.  But Apple does no manufacturing.  It happily outsources the less valuable middle stage of its product development–fabrication–to companies such as Foxconn and its low-wage workforce.  If you wonder how this strategy is working for Apple, just take a look at its stock price.

At first blush, the lithium-ion automotive battery business would seem to have a lot in common with the cell phone business.  Creating new lithium-based technologies and their spin-off products can be quite profitable.  At the other end of the product development cycle, controlling the customer is also highly lucrative. Tesla and its stock price vividly illustrate the value of using a lithium-ion battery-based product to control consumer sentiment and loyalty.

But the middle part of the product development cycle in batteries–the fabrication of battery cells–is a lousy business.  It involves huge capital investment, razor thin margins and extraordinary risk.  Every major U.S. corporation that has considered getting into the business of manufacturing lithium-ion automotive batteries at scale has taken a pass.  Even the most enthusiastic supporters of domestic lithium-ion supply chain development must grudgingly admit that every one of those corporations made a good business decision.

Based on the smile curve and the lack of North American corporate interest in large scale lithium-ion battery production, it is tempting to conclude that lithium-ion battery cell fabrication is not strategic, that it can safely be offshored much as Apple has offshored the manufacture of its iPhones.  But that conclusion would be wrong.  In fact, the lousy business of fabricating lithium-ion battery cells that no major North American corporation wants to do is the key to controlling the entire supply chain.  That is the great conundrum of the lithium-ion battery business.

The lithium-ion business is not the cell phone business.  Unlike makers of cell phones, lithium-ion battery makers do not have a direct nexus with customers that battery makers can leverage and turn into value.  Few consumers know or care who makes the battery that powers their electric car.  Fabricating battery cells is the last step in the lithium-ion battery supply chain.  There is no branding opportunity or consumer contact.  As a result, in Stan Shih’s model the lithium-ion battery product development cycle looks more like a half smile than a full one.

But the fact that a battery cell maker cannot extract a lot of value from the fabrication itself does not mean that fabrication is without value.  In fact, it is the lithium-ion battery cell maker that controls the supply chain, including the much higher value processes towards the early part of the development cycle.  Cell makers determine what R&D will be commercialized, what manufacturing machinery will be used, and what cathode, anode and separator materials will be employed in the cell.  Car manufacturers may provide cell makers with specifications that the cells must meet.  But how the cell maker meets those specifications is up to the cell maker.  It is that discretion which gives cell makers their inordinate power in the supply chain.

Even more important is the possible ability of cell makers to move downstream. It will always be tempting for cell makers to move downstream, into assembly of the applications their batteries power.  Selling those applications, rather than battery cells, is where the highly valuable nexus with consumers lies.  In electric vehicles the battery accounts for nearly half the cost and most of the complexity of the vehicle.  It would not be overly complicated for a cell maker to try to get into the business of assembling the rest of the automobile in order to capture the important second half of Stan Shih’s value creation smile.

When China went all in on its lithium-ion battery manufacturing sector 10 years ago, China was probably not really interested in fabricating lithium-ion batteries.  What interested China was, and still is, the global automobile market.  There is little doubt that as the market for electrified vehicles grows, a large number of Chinese consumer-branded electric vehicles will be competing for market share, perhaps successfully, with offerings from incumbent manufacturers in North America, Europe and Japan.  It is from the manufacture and sale of those vehicles that the Chinese government hopes to earn a return on its substantial investment in battery fabrication.

The challenge to building a robust lithium-ion battery supply chain in North America is this conundrum:  the strategic part of the supply chain you most need to build (i.e., cell fabrication) is the most commercially unattractive part of the entire supply chain.

There are two approaches to solving this conundrum.  The first is the China Approach and the second is the Tesla Approach.  They are not mutually exclusive.

The China Approach recognizes that battery cell manufacturing is lousy commercial business but that it has long-term benefits for other parts of the supply chain.   The Chinese government expects to recoup its investment in cell fabrication not through the cell makers but through the product applications that the cells enable.  Over the last 10 years, the Chinese government has supported its domestic cell manufacturers in many ways.  The most successful has been a hard push for vehicle electrification combined with a “white list” of domestic cell manufacturers from which the vehicle batteries effectively had to be purchased.  The China Approach anticipates a return on investment.  But the return will come from other businesses, not from the cell makers themselves.

The Tesla Approach is vertical integration of the entire lithium-ion battery supply chain, including cell materials, cell fabrication and the vehicles that the cells power including their important and highly valuable relationship with the ultimate consumer.  This appears to be what Tesla has in mind and announced at its last Battery Day.  Whether Tesla will ultimately follow through with its ambitious battery cell manufacturing plans is anyone’s guess.  But the principal behind the plan is clear.  Tesla hopes to recoup its investment in what would otherwise be an unprofitable cell fabrication business from the sale of its cars.  Cell fabrication will, in theory, allow Tesla to sell its vehicles at a lower price and in higher volume.  Like the China Approach, the Tesla Approach anticipates a return on its investment in cell fabrication.  The return just comes in a different way.

North America can choose the China Approach or the Tesla Approach, or both.  But it is difficult to see how North America can build a robust lithium-ion supply chain without including domestic lithium-ion cell fabricators at the core of that chain.  In the lithium-ion battery world, the cell makers control the supply chain.  Without one or more domestic cell maker champions that have the ability and inclination to purchase goods and services from other domestic supply chain companies, developing a robust North American lithium-ion battery supply chain may not be possible.