Joe Biden Wants More EVs. He’s Willing to Use Emergency Powers to Get Them

The White House quietly invoked the Defense Production Act to re-shore battery materials production. But will it work?

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On March 31, 2022, the Biden Administration announced several measures to address the spike in oil prices caused by the Ukraine war, and slipped in an unusual measure: the Defence Production Act. The DPA is normally used in times of war to authoritatively allocate raw materials and finished goods according to a priority system to ensure that the military has what it needs. But it’s unusual to implement the DPA for raw material production in peacetime.  

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Episode Transcript:

 In manufacturing, small business dreams of that first big score: the big sale to a major retailer, or a big OEM, or a prime contractor, or the government. Of course, it’s always a double-edged sword, and whether your contract is with NASA, or Boeing, or Ford, or the Department of Defense, you’re going to be dealing with a bureaucracy.  

Now the Biden Administration is throwing cubic dollars at solving the problem of American electric vehicle manufacturing by, sensibly, looking at the core of the problem: batteries. While 30 battery plants are under construction right now, securing the raw materials—principally lithium—that these batteries need looks like the weakest link in the supply chain.  

 So, quietly on March 31 of last year, the Biden Administration announced several measures to address the spike in oil prices caused by the Ukraine war and slipped in an unusual measure: the Defence Production Act. The DPA is normally used in times of war, to authoritatively allocate raw materials and finished goods according to a priority system to ensure that the military has what it needs. But it’s a little unusual to implement it for raw material production in peacetime. 

Initially, the DPA will be used to support the mining and processing of electric vehicle battery materials such as lithium, nickel, cobalt, graphite and manganese.  Why is the administration doing this? According to the White House, it’s a means to reduce reliance on China and other potentially unfriendly countries for critical inputs—but I think there’s another agenda at play here.  

The transition to electric vehicles was expected to be rapid, but that’s very much in question right now. Several major OEMs have announced a slowdown in EV project development, and the combination of high MSRP for all vehicles plus interest rates double what they have been for the last couple of decades suggests a slowdown in car buying in general, if not a recession across the entire economy. 

It may take a couple of decades for electric vehicles to become the majority of machines in American driveways, and another 10 years after that to completely replace gasoline. And in American electoral politics, it’s typically two terms, then out. 

So, what happens when Republicans take command? A lot depends on which Republican. 

Donald Trump appears to be profoundly anti-electric vehicle, and it seems likely that massive government subsidies for EVs and EV part production would be sharply curtailed by conservative legislators. For Democrats, I suspect that the race is on to nucleate a significant domestic supply chain for electric vehicle batteries, raw materials and finished vehicles, to ensure that EV production is past the point of no return. 

The key question for manufacturers up and down the supply chain is whether the industry will be profitable without government subsidies by the time conservative leadership replaces the Democrats. If so, it’s a done deal, and market forces will do the rest. But if Trump wins in 2024, no one knows what will happen, which could make any investment in EV materials production very speculative. 

For the auto industry, the 2024 election matters a lot.

Written by

James Anderton

Jim Anderton is the Director of Content for ENGINEERING.com. Mr. Anderton was formerly editor of Canadian Metalworking Magazine and has contributed to a wide range of print and on-line publications, including Design Engineering, Canadian Plastics, Service Station and Garage Management, Autovision, and the National Post. He also brings prior industry experience in quality and part design for a Tier One automotive supplier.