By on October 23, 2020

Seen by some as a moral imperative, electrification is swiftly changing the dynamics of the automotive industry. While automakers spend billions of dollars developing EVs and securing the necessary partners, many are becoming dependent on a handful of companies in Asia for the all-important battery cells needed to power the damn things. It’s gotten so serious that the U.S. government has taken an interest following a December 2019 report from the Institute for Defense Analyses that claimed battery manufacturers had taken on an “outsized importance” in the automotive sector.

It also said the United States would be at a distinct disadvantage if there are supply shortages  which is something that has already happened and is presumed to worsen as more electric vehicles flood into the market over the next few years. The automotive industry is pushing hard into electrification as governments around the world attempt to plot out an elaborate plan to supplant the internal combustion vehicle with EVs. But there are concerns that this has stacked the deck for a small number of suppliers from China, South Korea, and Japan.

With rare-earth elements necessary for battery production difficult to come by, there will be a period where mining will need to be ramped up immensely to support the glut of new-energy vehicles the industry plans on delivering. But there have been shortages already and they’ve been causing production problems for automakers. Both Volkswagen Group and Jaguar Land Rover had to postpone assembly schedules on electric vehicles after confronting supply issues with LG Chem.

The battery supplier is currently in a legal dispute with SK Innovation over an intellectual property dispute as well. Depending on how that goes, the U.S. International Trade Commission is warning of a “catastrophic supply disruption,” according to an industrial review from Bloomberg. Even if everything goes smoothly, many analysts have suggested there simply won’t be enough batteries on hand to meet some of the bold claims automakers have been issuing. EVs may remain prohibitively expensive well beyond 2025 (when they were originally claimed to reach parity with internal-combustion vehicles) and take decades longer to become the dominant mode of transportation for average families.

This matters little to battery suppliers, however. They’ve got the industry over a barrel now and are really only in competition with each other to strike favorable deals with automakers desperate to gain access to its wares in an attempt to avoid government fines and sell new product.

From Bloomberg:

Suppliers of batteries are wary of over-committing to any one automaker and eager to recoup the billions of dollars they have spent on production lines around the globe. Many are hedging their bets by crafting agreements with more than one partner. This small club includes the two South Korean rivals, Contemporary Amperex Technology Co. of China and Japan’s Panasonic Corp.

Battery suppliers can be very picky with their OEMs,” said Nathalie Capati, a former battery engineer at General Motors and Apple Inc. who now runs the Battery Lab, a consulting firm in San Francisco. “There are only a few cell suppliers who can meet their quality and volume. The automakers are at the mercy of cell suppliers these days.”

Even businesses that seem quite chummy are experiencing a semi-strained relationship. Tesla has been working with Panasonic at the Nevada Gigafactory for years. But CEO Elon Musk has repeatedly expressed frustrations that the company cannot meet production demands allowing him to build automobiles at a quicker pace. There’s little to be done about it. Panasonic claims it’s already operating near maximum capacity the world over and is not beholden to Tesla  it has a partnership with Toyota. Meanwhile, Musk has struck deals with CATL and other suppliers to maintain a steady stream of cells until it can finish building its own battery factories.

Other automakers might not be as fortunate, however. While many have gone out of their way to procure the raw materials necessary for battery production, few are in any position to manufacturer cells of their own and the clock is ticking. Loads of European locales have decided to ban the sale of internal combustion vehicles between 2030 and 2040. In the United States, California has sworn itself to uphold environmentalism at every turn and recently promised to ban gasoline-powered cars in 2035.

“A new arms race has begun,” Mary Nichols, chair of the California Air Resources Board (CARB), said in the announcement. “It’s an electric race to get to cheaper and more powerful batteries, and it’s one that manufacturers around the world are competing in.”

California is keen to export its environmental ideals to other states but there are a lot of questions on how feasible rampant electrification will be across the whole country. Many states still lack the charging infrastructure necessary to support EVs and range is not improving at a pace that makes us feel confident that can be gotten around without large tax-backed expenditures on advancing the national infrastructure. That’s likely to slow progress immensely, which is fine for the handful of battery suppliers that are already building batteries as quickly as possible and presumably happy to be courted by the automotive industry for the foreseeable future.

[Image: Sergii Chernov/Shutterstock]

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33 Comments on “EVs Have Given Asian Suppliers Unrivaled Industrial Might...”

  • avatar

    If an actual cell shortage does come to pass, then small-capacity EVs like the Mini and the Mazda MX-30 will be a good way to cope or bridge a gap. There are also range-extended EVs as seen from BMW and GM, hybrids as seen from Toyota and many others, the possibility of expanding charging networks, and even the possibility of just selling gas cars a while longer.

    All these are possible, even before considering the possibility of federal investment in standardization and manufacturing capacity. Which might make sense at some point, but I am sure industry will figure out something that works to a point.

    Raw material supply is another issue, that may become more pressing.

  • avatar

    “With rare-earth elements necessary for battery production difficult to come by,”

    Actually, they aren’t. The name is misleading and they are abundant:

    • 0 avatar

      There are hundreds of millions of tons of mine tailings that are waiting to be reprocessed. New holes don’t have to be made.
      Coal, instead of being burnt, has lots of useful stuff in it, too (and some nasty stuff, such as mercury, arsenic, benzene, and radioactive elements, that get distributed in the smoke).

  • avatar

    “EVs may remain prohibitively expensive well beyond 2025”

    $40k is prohibitively expensive? You can get a new Bolt for $25k in some places. Try to find an ICE car with the performance of a Bolt for $25k. An M4 is $70k and accelerates 0-60 in 4.1 seconds. A Model 3 performance is $55k with a 3.1 second 0-60 time. The EV is cheaper with quicker performance. The funniest part is that the M4 has 316 miles range and the Model 3 is 315. So I guess the EV needs to make up that one mile range. Or, you could settle for a long range version of the 3 for 47k that’s a tenth of a second slower than the M4 but has 353 miles of range and $23k less in price.

    Given this example, it’s safe to say that at least in some cases, EVs are cheaper and have longer range than an ICE equivelent.

    • 0 avatar

      A new Kwid is $6K in some places.
      Lowest cost Bolt is $38K MSRP. Chevrolet Spark is $15K.
      Yes, EV is more expensive.

    • 0 avatar

      Ah yes, the non-sequitur argument.

    • 0 avatar

      “Try to find an ICE car with the performance of a Bolt for $25k.”


      Pretty much every ~$25K sport compact of today runs with the Bolt (or is slightly faster). Having driven a Bolt and a 1G Soul Turbo back-to-back, performance is nearly identical. The Chevy is fine but its acceleration is far from a killer app like it is on a Tesla.

      Plus the Bolt actually starts at $36.6K if GM is needing to discount them over 30% then that tells me it is a dead fish.

      • 0 avatar

        “Plus the Bolt actually starts at $36.6K if GM is needing to discount them over 30% then that tells me it is a dead fish.”

        I’d argue every one lacking a “T” on the hood is, but we must also remember the old time GM strategery of pricing things to the sky and them selling at a “discount” than just pricing them correctly in the first place.

    • 0 avatar

      I have a daughter near driving age. It dawned on me that there are TONS of 2 year old Nissan Leafs available for $10k. She needs to run around town and get back and forth to school. A Nissan Leaf is perfect for this.

      EVs aren’t ubiquitous quite yet – but they are accessible if they fit your needs.

      • 0 avatar

        Perhaps the wholesale is $10K, but where are you seeing these things being retailed or private party sold for $10K? Cheapest I am seeing on Autotrader is $15,3, range being it to $22,9. Every one is a fool’s buy if the wholesale is anything like what it was a few years ago (literally $3,500 for MY12s in MY16/17).

    • 0 avatar

      “$40k is prohibitively expensive?”

      Uh yeah, unless you feel like making 84 month payments.

  • avatar

    “You can get a new Bolt for $25k in some places.”

    Not here in middle Tennessee, the ones I looked at last year were $40k plus and no power seat! Where’s this “some places” Shangri la?

    • 0 avatar

      I can find a few within 250 miles of me.

      The thing about the Bolt is that the EV part is pretty well done but the rest of the car is a Spark with seats that apparently benchmarked Keira Knightley’s bodytype.
      But if you’re relatively svelte and want an EV there’s worse things to spend $25K on.

    • 0 avatar

      Everywhere. Costco $3k discount and GM $8,500 + whatever the dealer is giving. A $35k Bolt – $11,500 is $23,500. I would add-in quick-charging version which gets you around $25k. There have been plenty of articles online about this.

      Central Tennesee $28k

  • avatar

    Why is 0 to 60 in 3 seconds so important? There is gobs of traffic everywhere and no one is going 60!

    I guess if “mining activities” get ramped up for raw materials to make batteries, along with ore processing, etc, etc, that positive environmental aspect of EV’s starts to slide out the window.

  • avatar

    • When I was a kid in the 70’s, disposable AA batteries were expensive and weak and they leaked. Alkaline batteries got seriously good in the 90’s.

    • Cordless tool batteries have made huge strides recently. [Bought a “Hart” (exclusive to Walmart) 1/2″ impact wrench for small $$ – the 1.5 Ah battery weighs only 0.8 pounds and powers the 3.3 pound tool with authority (the charger weighs only 0.3 pounds).]

    • We are still in the early days of modern EV batteries. (They will get significantly better.)

  • avatar
    schmitt trigger

    Pretty soon, instead of fearing OPEC, we’ll have to fear the OREEC cartel.

  • avatar

    Considering German fascination with everything mechanical, e.g. using vacuum pipes instead of electric actuators and affection to mechanical dolls instead of AI, I have a suggestion to German automakers to use clockwork spring powered cars – so called Zoom-zoom cars. It is very simple design which Germans will have opportunity to overcomplicate.

    The idea is simple – to charge the car you drive to whatever station where for certain fee they attach electric motor to winding mechanism on you car. So motor winds up the spring and it takes only about 5 minutes – same amount of time it takes to fill tank in ICE vehicle!

    I am looking for sponsor to patent this idea.

  • avatar

    Except for Tesla, the US made a choice not to compete in the EV space — and with the full support of a lot of people complaining now. [Facepalm]

    • 0 avatar

      >the US made a choice not to compete in the EV space

      It did?

    • 0 avatar
      SCE to AUX

      Not the US government, but US mfrs.

      Ford and GM offered the compliance Focus EV and the Bolt EV, respectively, and that’s about it, for the last several years. FCA offered only the Fiat 500e, which was also a compliance car.

      Too much money to be made selling pickups and SUVs.

  • avatar
    Master Baiter

    Those of us who’ve worked with batteries know all the innovation and suppliers come out of East Asia. Same with solar panels. So this brave new future of solar panels powering EVs just means that the East Asians will dominate the world. We’d be better off staying with ICE engines powered by the oil reserves we have right here at home.

    • 0 avatar

      Lot’s of things that require a lot of chemicals to make seem to end up being made where laws are less strict. Years ago I noticed some of our China based suppliers seemed to be sending their metal parts to India for plating. That said the US it would seem could make some of these things here is they really wanted to.

  • avatar

    2017 soul 36k miles 11,900

    2017 Leaf 39k miles 10,900

    2017 500E 19k miles 9,998

    • 0 avatar

      Thanks. Interesting this MY17 Leaf is priced the way it was and the 18s I saw were significantly more. That Soul has body damage reported, and the 500e in MA (when only sold in Cali) is hilarious. I wonder if the MA market is part of the reason for these prices? Not sure what the degradation is in sub 20F, but unless something changed the range does drop. For your purposes it probably wouldn’t matter much so yes at 10K for a child’s safe runabout it doesn’t look too bad.

  • avatar

    Sorry not the starter on this just another bargain hunter. 18 Leaf was redesigned, I assume that accounts for the difference. Soul would be my choice but most are more like 13k with a clean carfax. On the 500E Mass is a CARB state and I think in the last couple years they did expand 500E sales to all 7 CARB states, as they are fairly common here in CT.

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