U.S. Debates How Much to Sever Electric Car Industry’s Ties to China

The Biden administration’s efforts to promote domestic supply chain for electric vehicles

The Biden administration has been trying to jump-start the domestic supply chain for electric vehicles so cleaner cars can be made in the United States. But the experience of one Texas company, whose plans to help make an all-American electric vehicle were upended by China, highlights the stakes involved as the administration finalizes rules governing the industry.

Huntsman Corporation started construction two years ago on a $50 million plant in Texas to make ethylene carbonate, a chemical that is used in electric vehicle batteries. It would have been the only site in North America making the product, with the goal of feeding battery factories that would crop up to serve the electric vehicle market.

But as new facilities in China came online and flooded the market, the price of the chemical plummeted to $700 a ton from $4,000. After pumping $30 million into the project, the company halted work on it this year. “If we were to start the project up today, we would be hemorrhaging cash,” said Peter R. Huntsman, the company’s chief executive. “I’d essentially be paying people to take the product.”

The Biden administration is now finalizing rules that will help determine whether companies like Huntsman will find it profitable enough to participate in America’s electric vehicle industry. The rules, which are expected to be proposed this week, will dictate the extent to which foreign companies, particularly in China, can supply parts and products for American-made vehicles that are set to receive billions of dollars in subsidies.

Emphasis on Sustainable Development Goals (SDGs)

The administration is offering up to $7,500 in tax credits to Americans who buy electric vehicles, in an effort to supercharge the industry and reduce the country’s carbon emissions. The rules will determine whether electric vehicle makers seeking to benefit from that program will have the flexibility to get cheap components from China, or whether they will be required instead to buy more expensive products from U.S.-based firms like Huntsman.

The energy department will also use the rules to help evaluate applicants vying for billions of dollars of grants for battery factories, by giving priority to companies that do not source their material from riskier foreign entities.

Challenges in balancing cost and secure supply chains

The lawmakers who wrote the climate bill, including Senator Joe Manchin III, the West Virginia Democrat, included language that bars an electric car from qualifying for the tax breaks if the critical minerals or other components used in its battery were made by “a foreign entity of concern.” Lawmakers defined that as any firm that is owned by, controlled by or subject to the jurisdiction of North Korea, China, Russia or Iran.

But they left it up to the Biden administration to fill in the details, including important questions like what constitutes a Chinese company, and what product qualifies as a “battery component.”

The administration faces a tricky calculation with the new rules. If it allows more companies to qualify for the benefits, Americans will have a wider choice of low-cost electric vehicles to choose from. That would put more clean cars on the road and help to mitigate climate change. It could also help to shore up the finances of U.S. automakers that are losing heavily on electric vehicle production.

But such a path could undercut the administration’s other priority — to build more secure supply chains for electric vehicles. The government has been aiming to use the climate law to boost manufacturing of electric vehicles and their parts in the United States and in allied countries, and reduce dependency on China, which dominates global markets for electric vehicles and their batteries.

The effort to balance these concerns has touched off a fight between automakers and parts manufacturers, U.S. miners and labor unions.

Impact on automakers and pressure to keep costs down

Automakers have been awaiting the guidelines with trepidation.

Carmakers like General Motors and Hyundai, spurred by the new climate law, are racing to build factories in the United States to produce batteries and process materials like lithium. But they are still years away from being able to produce an electric vehicle without materials and components from China, auto industry representatives say.

China’s

SDGs, Targets, and Indicators Analysis

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy
• SDG 9: Industry, Innovation and Infrastructure
• SDG 12: Responsible Consumption and Production
• SDG 13: Climate Action

The article discusses the Biden administration’s efforts to jump-start the domestic supply chain for electric vehicles, which aligns with SDG 7 on affordable and clean energy. It also highlights the importance of building secure supply chains for electric vehicles, which relates to SDG 9 on industry, innovation, and infrastructure. The article mentions the need to reduce dependency on China and mitigate climate change, which are relevant to SDG 12 on responsible consumption and production and SDG 13 on climate action.

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 7.2: Increase substantially the share of renewable energy in the global energy mix.
• SDG 9.2: Promote inclusive and sustainable industrialization and foster innovation.
• SDG 12.2: Achieve sustainable management and efficient use of natural resources.
• SDG 13.2: Integrate climate change measures into national policies, strategies, and planning.

The article emphasizes the need to increase the production of electric vehicles in the United States, which would contribute to increasing the share of renewable energy in the global energy mix (SDG 7.2). It also highlights the importance of promoting sustainable industrialization and innovation in the electric vehicle industry (SDG 9.2). The article discusses the challenges of sourcing materials and components for electric vehicles, indicating the need for sustainable management and efficient use of natural resources (SDG 12.2). Additionally, the article mentions the goal of mitigating climate change through the integration of climate change measures into national policies (SDG 13.2).

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Percentage increase in domestic production of electric vehicles
• Percentage of renewable energy sources used in electric vehicle production
• Reduction in dependency on Chinese suppliers for electric vehicle materials and components
• Integration of climate change measures in national policies related to electric vehicle production

The article does not explicitly mention specific indicators, but progress towards the identified targets can be measured using indicators such as the percentage increase in domestic production of electric vehicles, the percentage of renewable energy sources used in electric vehicle production, the reduction in dependency on Chinese suppliers for electric vehicle materials and components, and the integration of climate change measures in national policies related to electric vehicle production.

Table: SDGs, Targets, and Indicators

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Source: nytimes.com