The White House has announced over $3 billion in grants for domestic battery processing, manufacturing, and recycling projects. Energy Secretary Jennifer Granholm stated that these investments will help reduce America’s reliance on critical materials from economic competitors like China. The Biden administration aims to supply a quarter of the global lithium and produce half of the world’s battery cells by 2030. Lael Brainard, director of the National Economic Council, emphasized that these investments will address vulnerabilities in critical minerals and battery supply chains dependent on China.
The grants, which are part of a second round of federal funding, will support 25 projects across 14 states and have the potential to create up to 12,000 jobs. The budget for these grants has already been allocated under the bipartisan infrastructure law. The first round of funding closed in 2022 with $1.82 billion awarded to 14 projects.
China currently dominates the global lithium-ion market with an output exceeding estimated global demand last year. In 2023, around 70% ($13.1 billion) of U.S. lithium-ion battery imports came directly from China, increasing to over 80% in the first half of this year due to anticipated higher tariffs.
Last week, the Office of the United States Trade Representative finalized tariffs on Chinese goods including lithium-ion electric vehicle batteries. Tariffs on these batteries will increase from 7.5% to 25% starting September 27th.
The Biden administration is utilizing various tools such as grants, loans, tax credits, and private sector investment totaling $120 billion in recent years to protect domestic investments and reduce dependence on foreign sources like China.
While China currently does not restrict exports of lithium-ion batteries itself, it implemented export controls on high-grade graphite—a crucial component for electric vehicle batteries—starting December 1st this year.
A report by Washington-based think tank Atlantic Council warns that if China cuts its supply of lithium-ion batteries entirely or significantly reduces it, there could be severe shortages affecting key defense products such as drones, F-35 fighter jets,surface-to-air missiles,and radios used by the United States.
