AMAC Exclusive – By Neil Banerji
President Joe Biden’s planned “electric vehicle revolution” has run into plenty of pushback from consumers and manufacturers in the United States, but it now faces another, potentially even more daunting challenge as well – Communist China.
Late last month, Beijing moved to significantly restrict exports of graphite, a mineral used in the production of electric vehicle (EV) batteries, citing “national security concerns.” Although the Chinese government has claimed that the restrictions are not targeted at any one country, the news came just days after Biden announced new limits on the kinds of semiconductor products U.S. companies can sell to China.
Graphite is essential to electric vehicle production because it is used to create battery anodes, or the negative terminal on a battery. There are currently no known substitutes, and each EV battery pack requires between 110 and 220 pounds of graphite.
According to the U.S. Geological Survey, worldwide demand for graphite has skyrocketed by 250 percent since 2018, coinciding with the growth in the EV market. Graphite is also used to manufacture semiconductors and in the aerospace industry – two other fields that have seen significant growth in recent years. According to the International Energy Agency, demand is expected to rise an astonishing 20-25 times by 2040.
That has been good news for China, which currently controls more than 90 percent of the global graphite market. While two other countries, Turkey and Brazil, have larger graphite reserves (27.3 percent and 22.4 percent of the global supply, respectively) China has far greater refining and export capabilities. China also has a stranglehold on the refining of other rare earth minerals like lithium and cobalt that are essential for EV battery production.
China’s graphite restrictions have potentially disastrous implications for the Biden administration and the automotive industry in the United States and throughout the West, which has dived headfirst into an electric vehicle “revolution.” The United States imports about one third of its graphite from China and has few other options.
Earlier this year, the White House proposed a new rule requiring two-thirds of all new vehicles sold in the United States to be electric by 2032. Given that less than six percent of all new cars sold last year were electric, Biden’s plan combined with China’s recent moves would mean a massive overhaul of the entire auto manufacturing industry – and significant cost increases for consumers.
While electric vehicles have come down somewhat in price recently (although still remain, on average, about $5,000 more expensive than gas-powered vehicles) China’s graphite restrictions now threaten to send prices soaring. Some producers have been stockpiling graphite, but are warning that without a steady supply from China, they simply won’t be able to keep up with demand.
Biden’s EV mandate has also put automakers in a particularly precarious financial position that could become untenable if there is a graphite supply crunch. Ford alone has said it expects to lose $4.5 billion to comply with the mandate, and will likely lay off thousands of workers. A graphite shortage would make things even worse.
China’s moves to restrict graphite exports have also highlighted how Biden’s “green” agenda is not just economically foolish, but a legitimate national security risk, as it relies heavily on Chinese resources. As tensions with the communist country continue to rise, Beijing has proven that it now has the power to influence the American economy in a significant way – and that it is willing to use such power.
Other countries throughout the West could also feel the pinch from China’s new policy, as many European nations have even more ambitious EV plans.
Meanwhile, Chinese car companies could be set to make major inroads in global markets. Chinese EVs are already cheaper than models built elsewhere and are showing up on roadways in Russia, Australia, and Southeast Asia.
In the first eight months of this year, China surpassed Japan as the world’s largest car exporter, with shipments surging 72 percent to 2.3 million vehicles. A quarter of those were electric – including 350,000 EVs to nine European countries. Industry experts say that Chinese carmakers could double their market share to 33 percent by 2030.
Biden’s EV mandate may thus be leading to a worst-case scenario for the United States and its Western allies. American automakers, already hit hard in recent decades by offshoring and rising costs, are now threatened with a supply crunch in the materials necessary to effectuate Biden’s already unrealistic EV “revolution.” In addition, China looks poised to take a commanding lead in the global vehicle market – both electric and gas-powered.
Despite this looming disaster, Biden has shown no indication that he is willing to reverse course. Once again, the economic and national security interests of the United States are taking a back seat to rigid left-wing ideology.
Neil Banerji is a proud Las Vegas resident and former student at the University of Oxford. In his spare time, he enjoys reading Winston Churchill and Edmund Burke.