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The EV battery ‘catch-22’

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From The Center Square

While setting aggressive goals for electric vehicle market share, the Biden administration also wants tariffs and or restrictions on the importation of vehicles and the minerals needed for their batteries – creating heightened concerns over supply chains in what can be described as a “Catch-22” situation.

Solutions to some of the problems include battery recycling and increased domestic mining, however, the U.S. is currently limited in its capacity for both. Federal funds are spurring new recycling plant projects, but questions remain on whether there will be enough used material to meet projected needs.

In his e-book, “The EV Transition Explained,” Robert Charette, longtime systems engineer, and contributing editor for IEEE Spectrum, says making the transition is harder than anyone thinks. He recently told The Center Square it is truer now than it ever was.

“None of this is simple,” he said.

His argument centers on the lack of planning and systems engineering on initiatives that are politically, not engineering, driven. While change is possible, he suggested it would require trillions more in government spending and enforcing those changes through law.

Charette identified many serious issues in setting up the EV battery infrastructure – and even if those challenges are met, he said, there may be tradeoffs between affordability, security and environmental concerns.

Profitability. Battery recycling is a still-developing process which is time consuming and expensive. The cost of purchasing recycled materials may be more costly than buying them new.

Manufacturing demand and potential backlog. The U.S. will require eight million batteries annually by 2030 to meet the government’s EV target, with increases each year after that.

Standardization. Batteries vary in configuration, size, and chemistry.

Domestic mining. While decreasing our dependency on outside sources, what are the environmental impacts? It can also take years to acquire permits and get a lithium mine up and running.

Mineral shortfalls. Secure and sustainable access to critical minerals like copper, lithium, cobalt, and nickel is essential for a smooth and affordable transition to clean energy. An analysis by the International Energy Agency indicates a “significant gap” between the world’s supply and demand for copper and lithium. Projected supplies will only meet 70% of the copper and 50% of the lithium needed to achieve 2035 climate targets.

The report said that “without the strong uptake of recycling and reuse, “mining capital requirements would need to be one-third higher. The agency also emphasizes China’s dominance in the refining and processing sector.

Transportation of discharged batteries classified as hazardous waste is one of the costliest steps of the recycling process. Experts suggest updates to federal EPA and DOT regulations for how battery-related waste is classified. In addition to health and safety, they say clearer definitions of what constitutes hazardous waste would help reduce transportation costs. Many recycling plants are being built in regions where production sites are located to address this.

Supply chain and skills gap shortages. The timetable set by the government is not aligned with the capabilities of the current supply chain. Software plays a key role in the management and operation of an EV battery, and automakers are competing for a limited supply of software and systems engineers.

Competing interests. The goal is to create a circular battery economy, reducing the need for raw materials. However, an EV battery that is no longer useful for propelling a car still has enough life left for other purposes such as residential energy storage. Experts propose a battery material hierarchy where repurposing and reusing retired EV batteries are more favorable to immediately recycling them, detouring them out of the cycle.

Charette says the biggest problem with recycling projections is that they are built on assumptions that have not been tested.

“We won’t know whether these assumptions hold until we reach a point where we are recycling millions of EV batteries,” he said.

Because most EV lithium-ion batteries produced through 2023 are still on the road, the International Council on Clean Transportation reports that the majority of materials being used as feedstock by recycling plants currently come from scrap materials created during battery production.

According to Charette, manufacturers also claim future generations of batteries will last 15 to 20 years, which he says would put a bigger kink in the used-battery supply chain.

Another issue contributing to consumers’ reluctance to buy an EV is the inability to determine the overall health of your battery. Current testing methods are inefficient and costly.

EV adoption has so far not met projections and with all the competing interests, Charette said the market will ultimately tell us what direction the situation is headed. He is also intrigued over the impact government pressure will have on the eventual outcome.

He said many individual components have yet to be worked out, adding that although there is a vision, “we’re a heck of a long way from that vision to getting where we need to go.”

In his opinion, battery recycling issues are even further behind than transitioning the electric grid to renewable energy sources.

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Automotive

US EV Industry Shifts Back Into Reality Gear

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From the Daily Caller News Foundation

By DAVID BLACKMON

 

At the start of each year, I write a piece in which I make a set of predictions about what will happen in the energy space during the coming 12 months. One prediction I made in this year’s story focused on the likelihood of a big fallout in America’s EV manufacturing industry.

Citing Fisker and Rivian as examples, I questioned whether any of the pure-play electric vehicle companies based in the United States had the ability to compete with Tesla in that market.

I took some heat from viewers that same week after I predicted on a podcast that every one of the U.S. pure-play EV makers besides Tesla would be either in bankruptcy or teetering on the brink by the end of 2024. As things are turning out, my only regret there is that I did not predict they would all be in that state by the middle of 2024 instead of the end of the year.

This week, Fisker filed for bankruptcy, becoming the latest in a series of casualties in the growing falling-out in the EV sector. As The New York Times noted in its story on the matter, Fisker was one of a number of pure-play EV makers who were able to raise billions in startup funds from investors who got caught up in the EV frenzy during 2020 and 2021.

Several of those firms, like ProterraArrival, and Lordstown Motors already preceded Fisker down the bankruptcy path. Others, like Rivian, are right on the verge of taking the same plunge.

Lucid makes just one model, a luxury sedan, and is struggling to find buyers. It boasted about setting a new delivery “record” in the first quarter of this year, but a closer search reveals that was for only 1,967 units. The carmaker followed that announcement with another in May that it would lay off 400 employees in an apparent effort to conserve cash.

Oof.

EV truck maker Nikola, meanwhile, saw its stock price hit a record low this week amid ongoing softening in the US EV market. At the close of June 20 trading, Nikola’s price had dropped to just 33 cents per share. The stock collapse comes months after the company had delivered its first hydrogen fuel cell heavy truck during Q1, but that amounted to sales of just 42 units.

These and other pure-play EV makers are not in any way serious competition for Tesla.

Note also that Tesla is having major struggles of its own as the pace of EV adoption growth slows to a snail’s pace. The company laid off 10% of its workforce in May amid the ongoing slowing of the EV market. Tesla’s rollout of its radically designed Cybertruck has been plagued by recalls, technical issues and customer complaints, and the company’s overall Q1 2024 sales numbers fell dramatically from both Q4’s numbers and year-over-year.

But its decade-long head start on the competition, vertical integration of supply chains and diversification into other ventures give Tesla advantages these other pure-play EV companies do not and cannot enjoy. It remains uniquely situated among its peer group to survive the market contraction.

Traditional automakers like Ford and GM have been able to placate investors about their stunning losses in EV ventures (Ford somehow managed to lose $132,000 per unit sold in Q1 2024) by offsetting them against major profits from their traditional gas and diesel-powered car divisions. But even those companies have invoked an array of strategic shifts over the past six months in which they have delayed or cancelled planned new investments in their EV dreams.

What we are seeing here is a rapid shifting back to reality in the US auto industry. EVs always have been, are today, and will remain a niche product that can fill specific needs for a limited segment of our population, mainly the wealthy. The reason why the traditional, gas-and-diesel-powered auto segments at companies like Ford and GM remain wildly profitable is because that is where the real auto market remains.

No amount of Soviet-style central planning, industrial policy and command-and-control edicts and regulations coming down from Washington, D.C., are going to change that reality.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

Featured image screenshot: (Screen Capture/PBS NewsHour)

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‘Save Our Cars’ Is A Winning Campaign Message In An Age Of EV Mandates

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From the Daily Caller News Foundation

By KEVIN MOONEY

 

Automobile consumers who treasure the open roads during the summertime could upend the presidential campaign and U.S. Senate races in surprising places if public opposition to electric-vehicle mandates and other regulations continues to rise.

That is what some recent polls suggest and it certainly helps to explain why the Biden administration is poised to artificially reduce fuel prices by selling one million barrels of gasoline from an energy reserve in New England timed with the summer driving season and in anticipation of the November elections.

Since the East Coast consumed in excess of three million barrels a day of gasoline last June, it is not evident that having an additional one million barrels on the market will make an appreciable difference.

Moreover, there is an argument to be made that by tapping into the reserve Team Biden is leaving the region open to cyberattacks that would disrupt energy supplies. (Recall, that is precisely what happened throughout the southeast in 2021 when a ransomware attack hit the Colonial Pipeline.)

But even in the absence of any cyber drama, the cumulative effect of President Joe Biden’s anti-energy agenda is already registering with consumers who benefit from affordable, reliable energy. This is particularly true where conventional, gas-powered cars are concerned.

On holiday weekends, cars erase differences, bring families together and improve the quality of life. The American Automobile Association (AAA) predicts almost 50 million people will travel 50 miles or more from their homes to celebrate Independence Day over the weekend of June 30 to July 4.

This would represent an increase of 3.7% from 2021 bringing travel volumes to where they were prior to the COVID-19 pandemic in 2019. This increase will be particularly acute with AAA expecting 42 million Americans to hit the roads this coming Independence Day.

But what about those EV mandates?

President Biden and California Gov. Gavin Newsom, a fellow Democrat, remain undeterred by the paucity of charging stations, the limited range of EV’s, their exorbitant costs, and the vulnerability of foreign supply chains leading back to China as they press ahead with new regulatory initiatives. Biden’s Environmental Protection Agency finalized a tailpipe emissions rule in March aimed at coercing automakers into selling more EVs while the California Air Resources Board is pressing ahead with a “zero emissions” rule the board approved last year to meet Newsom’s stated climate goals.

California is clearly working hand in glove with the Biden administration to achieve zero emissions goals for vehicles by 2035. This effort will most certainly limit consumer choice and raise costs.

Despite all the subsidies and regulatory schemes developed to favor EV’s, they represent only about 1% of the 290 million vehicles in the U.S. today. Meanwhile EV costs continue to soar.

Recent studies also show that EVs, on average, are more expensive to own and operate than their gas-powered counterparts. So how should consumers respond to the regulatory onslaught?

Enter the “Save Our Cars Coalition,” which includes 31 national and state organizations devoted to preserving the ability of consumers to select the vehicles most suitable to their needs.

Tom Pyle, president of the Institute for Energy Research, a coalition member that favors free market energy policies, views cars as an integral component of American life. The Biden-Newsom regulations amount to what Pyle describes as “an assault on American freedom.”

“In a nation as expansive as the United States, cars are not merely vehicles, they are integral to the American way of life,” Pyle says. “They play a pivotal role in our daily lives, especially in suburban and rural settings. This modern-day prohibition would outlaw a product and a value–in this case, gasoline-powered cars and trucks that have created personal mobility on an unprecedented scale – that it cannot persuade people to forego themselves.”

The coalition is perfectly positioned to make EV mandates a campaign issue in areas where the affordability of cars capable of traversing long distances without frequent stops is very much on the minds of voters. State officials who continue to double-down on California-type regulations will only serve to bolster the coalition’s arguments.

By contrast, states that break free from California’s emissions standards could become surprisingly competitive in the presidential race. Virginia Gov. Glenn Youngkin, a Republican, recently announced that he would end California’s EV mandate in his state by the end of this year. Although Virginia hasn’t backed a Republican for president since George W. Bush was re-elected in 2004, polls show Biden and  Donald Trump are in a dead heat. The former, and perhaps future Republican president, is on record opposing Biden’s EV mandates.

By contrast, Gov. Phil Murphy of New Jersey, a Democrat elected in 2017 and re-elected in 2021, is moving full speed ahead with a California-type mandate requiring all new car sales to be electric by 2035. Polls show Murphy’s Jersey constituents are not keen on the policy change. In fact, more than half of state residents say they are not inclined to buy an electric car even with the mandates.

New Jersey has not voted for a Republican presidential candidate since George Bush Sr. won the state in 1988. But fresh polls show Biden leading Trump by just seven points in the Garden State. It is worth noting that New Jersey has a large block of unaffiliated voters that can be pliable in tight races such as the most recent gubernatorial campaign.

Murphy almost lost his re-election bid to Republican Jack Ciattarelli, a former assemblyman and businessman, who came within a few percentage points of pulling off an upset. Trump’s campaign rally in Wildwood, N.J., that attracted more than 100,000 people could also serve as a barometer for a potentially close election. A beach resort community, Wildwood is practically inaccessible without the kind of vehicles Biden and Newsom are attempting to ban.

The big prize though may be Pennsylvania where Trump is leading Biden in recent polls. There is also a competitive U.S. Senate race in that state between Sen. Robert Casey Jr., the Democratic incumbent, and Dave McCormick, the Republican challenger.

Polls show Casey is only ahead by six points. So far, Casey has been ducking and avoiding any questions about his position on EV mandates. With Trump already leading, and McCormick gaining in the Keystone State, anyone running on a platform of “Save Our Cars” could have a field day.

Kevin Mooney is the Senior Investigative Reporter at the Commonwealth Foundation’s free-market think tank and writes for several national publications. Twitter: @KevinMooneyDC

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