Pelosi’s Taiwan trip could further strain EV battery supply chain issues

Christopher S. Tang

Tensions between the United States and China, stirred up by the recent visit of U.S. Speaker of the House Nancy Pelosi to Taiwan, could create a further problem for the manufacturing of electric vehicles, already hampered by the worldwide supply chain issues, says a distinguished professor at the University of California, Los Angeles.

Christopher S. Tang, who is a scholar of global supply management, told Canadian auto dealer that the visit by Pelosi has stirred up relations between the U.S. and China, and he is concerned about a possible war with China and Taiwan that would include American involvement. He said the Taiwan Semiconductor Manufacturing Company (TSMC) is building a $12 billion plant in Arizona that is scheduled to be operational in 2024. According to azcentral.com, the project represents the largest foreign investment in Arizona’s history. Tang said TSMC is producing 90 percent of the high-end semiconductor chips in the world.

“We hope the war will not happen,” said Tang. “If China attacks Taiwan, all bets are off.”

Tang said the visit by Pelosi led to a major Chinese supplier of EV batteries to push the pause button last week on announcing a multi-billion-dollar plan to build factories in the U.S. to supply Tesla and Ford Motor Company. China produces more than 70 per cent of the lithium batteries used in the production of EVs.

He also said there are complications with the extraction and the mining of lithium in various states in the U.S. and Mexico, which are further being hampered by environmentalists.

Tang also said China has stakes in 13 of 19 companies that mine cobalt, which is also used in manufacturing EV batteries, in the Democratic Republic of Congo. It produces 70 per cent of cobalt used in the world.

He said the U.S. is trying to become less dependent on China while also producing other types of batteries that don’t require lithium or cobalt to maintain the EV targets set out by President Joe Biden’s administration.

“I think politically speaking, the (relationship) between the U.S. and China is getting really tense,” said Tang. “Maybe both countries need a diversion because both have domestic issues. Sometimes politicians like to stir things up so instead of domestic issues it’s global issues.”

Despite all of this, Tang said there are solutions because it will stimulate innovation and new technology that may not require lithium or cobalt. He said the supply of cobalt is limited and extracting it from Congo violates human rights. 

He also said there are other types of batteries that are more sustainable, using minerals that are widely available such as aluminium.

“That will be much more sustainable and recyclable,” said Tang. “That may stimulate innovation and will achieve the more sustainable goal for EVs and sustainable materials for the batteries otherwise it defeats the original intent.” 

He said the U.S. Department of Energy has provided a conditional loan of $2.5 billion to support a venture between General Motors and South Korea’s LG Energy Solution to develop EV batteries that will require less lithium. He also said the U.S. is funding the Oak Ridge National Laboratory in Tennessee to develop batteries that don’t require cobalt.

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