The landscape of battery technology and electric vehicle (EV) manufacturing in the United States is undergoing significant changes, propelled primarily by aggressive funding initiatives by the Biden administration and major investments from automotive manufacturers. However, the incoming administration of President-elect Donald Trump poses potential complications, particularly relating to tariff policies on imports from China and the future of existing economic incentives.
In a substantial move against climate change, President Biden signed the Inflation Reduction Act (IRA) in 2022, which is regarded as the largest legislative effort targeting environmental issues in American history. It allocated $400 billion towards clean energy sources, of which an estimated $110 billion has been specifically allocated to the battery industry. “For the battery industry, $110 billion has been handed out and can’t be repealed," stated Simon Moores, CEO of Benchmark Mineral Intelligence, confirming the profound impact of the funding that precedes Trump's presidency.
Despite the sturdy footing Evs have gained under Biden, uncertainty looms regarding Trump's proposed elimination of certain tax credits, notably the $7,500 tax incentive for EV purchases, which serve to enhance their competitiveness in the market. Moreover, Trump's consideration of imposing 60% tariffs on Chinese imports—critical sources for the majority of battery components and materials in the U.S.—could drastically inflate prices and disrupt the growth trajectory of the EV market in America. Trump’s past assertions regarding the need to reduce reliance on Chinese manufacturing complicate this scenario, as the supply chain for EVs heavily relies on batteries and materials sourced from China.
As it stands, prestigious automobile manufacturers, including General Motors, Honda, Ford, and Hyundai, are actively constructing new plants across the United States, with about 40 factories reported to be in development set to commence operations by 2025. These ventures represent multibillion-dollar investments aiming to bolster domestic production capabilities for both EVs and their batteries. For example, Hyundai's ambitious $5.5 billion manufacturing facility in Georgia is expected to start producing in early 2025. Jose Muñoz, set to become Hyundai Motor’s new CEO, emphasised the commitment to the U.S. market stating, “We decided to invest in America during the previous Trump administration... The key point for us is that we continue to believe America is the most important market for our company.”
In tandem with this pattern of development, the Biden administration is also making headway in reducing reliance on foreign minerals through funding initiatives targeting domestic production of key battery materials. Following a significant $3 billion allocation for various projects across 14 states, there is clear policy intent to encourage the domestic sourcing of critical elements such as lithium and cobalt, essential not only for electric vehicle batteries but also for military applications.
However, Biden’s policy of pursuing improvements in domestic manufacturing is expected to face tension with Trump’s agenda for potential deregulation and trade barriers. A notable case in this back-and-forth is Tesla—under Elon Musk's leadership, the company has enjoyed substantial benefits from government incentives, yet is deeply reliant on Chinese manufacturing. The looming competition from companies like BYD presents an additional obstacle, as BYD is set to surpass Tesla as the world’s leading electric vehicle seller in the near future.
Meanwhile, JB Straubel, co-founder of Tesla and the founder of Redwood Materials, has sought to innovate within the battery materials landscape by focusing on recycling and domestic production. His initiative has garnered $2 billion in low-interest loans from the Biden administration to facilitate efforts in building a robust battery components supply chain.
Additionally, Chinese manufacturers are exploring opportunities to establish operations in the U.S. market as potential tariffs could push them to expand locally. Robin Zeng, head of China’s top battery manufacturer, CATL, indicated that an American plant might be viable if invited by the incoming administration.
Heightened activity in the battery manufacturing sector reflects the growing convergence of interests across political divides—car manufacturers and policymakers are increasingly aligned in their recognition of the strategic importance of scaling up domestic battery production. Yet, the outcome of these developments heavily relies on the policy direction under Trump's presidency, which carries both prospects for advancement and risks of regression in America’s EV and battery industry.
Source: Noah Wire Services