In a battle between GM and Ford, $7,500 in tax credits are at stake depending on Biden’s definition of “foreign entity of concern.” The exclusion aims to reduce US reliance on Chinese batteries and materials to make them.
Big 3 Intra-Battle Over Batteries
The Wall Street Journal reports a Ford vs. GM Feud Could Shape the Future of EVs in America.
In June, Ford Chief Executive Jim Farley pitched visiting members of Congress on the company’s plans for a $3.5 billion battery factory. Using Chinese battery technology at the Michigan plant, he argued, was a smart way for the U.S. to catch up with China’s expertise.
Later the same day at the General Motors CEO Mary Barra and her team had a different message for the lawmakers: Ford’s plans could be the harbinger of Chinese domination of U.S. car manufacturing.
Ford, with its plans to license Chinese technology to make cheaper, iron-based batteries in Michigan, has lobbied for a more flexible interpretation of the “foreign entity” rule. If its planned batteries aren’t eligible for the car-buyer subsidy, Ford executives have indicated they could scale back the investment; on Monday, the company paused construction of the new battery plant.
“This is not about GM vs. Ford,” a GM spokeswoman said. She said GM wants clarity and for the rules to follow the intent of the Inflation Reduction Act, which created the new tax-credit requirements.
Robbie Orvis, a senior director at Energy Innovation, a think tank on climate issues, said the tax credit—and the “foreign entity of concern” rule—will shape how many electric cars are sold in the U.S. in the next 10 years.
Ford hoped to get ahead by licensing technology from China’s Contemporary Amperex Technology Co. Ltd., known as CATL, to make lithium-iron-phosphate batteries at an industrial scale in the U.S. for the first time. They are much cheaper than other alternatives, reducing the production cost of the car.
Biden’s Self-Made Dilemma
Biden is guaranteed to upset someone. That’s what happens when you interfere in the free markets, taking sides.
Congressional members from Michigan have lined up behind GM. So did Senator Joe Manchin.
The infrastructure isn’t ready in either case, and inflation is sure to rise.
What About Materials?
Compounding the issue, “foreign entity of concern” also applies to the materials that go into the batteries.
Not only will Ford pay royalties to China for the battery technology, a strict definition of “foreign entity of concern” should apply to both GM and Ford over the minerals needed.
‘Land Grab’ for Lithium Just Getting Started
On January 31, CNBC reported ‘Land Grab’ for Lithium Just Getting Started with GM Deal
Key Points
- General Motors’ announcement on Tuesday that it plans to invest $650 million into Lithium Americas to secure access to lithium is the first of what surely will be more to come, according to Simon Moores, the CEO of Benchmark Mineral Intelligence.
- “EV companies, especially the auto majors, have learnt the hard way over the last five years that scaling batteries — giga factories — is much easier and quicker than scaling mining,” Moores said.
- It takes two years or more to build a giga factory and 10 years-plus to finance and build a lithium mine, Moores said.
Does the 10 years to build a mine factor in delays caused by clean energy NIMBY hypocrites who will fight new mines every step of the way?
Regardless, assume a giga factory is up and running in two years. Where precisely are the refined minerals for that giga factory coming from?
Once again, subsidies hinge on the definition of “foreign entity of concern”.
And where is the giga factory located. Will the giga factory use union labor driving up the cost?
What About Consumer Concerns?
Lost in the battle over “foreign entity of concern” ought to be the concern “how many people don’t want EVs crammed down their throats?”
No one is taking legitimate consumer concerns like price, insurance, number of reliable chargers, charging times, inflation, and even hurricane evacuations into proper consideration.
Are You Concerned?
You should be. Concern is the word of the day starting with government mandated EV solutions, regulations that will ban gas stoves, looting, and piss poor public education in big cities.
Germany lived in a Ricky Ricarian world before the US blew up it’s Nord Stream pipelines.
“It takes two years or more to build a giga factory and 10 years-plus to finance and build a lithium mine, Moores said.”
And at least two to five generations of consistent growing of internationally competitive industry, to reach a point where there are an ecosystem of engineers, managers, production workers and relevant-knowledge executives even remotely capable of competing with the market leading Chinese outfits at either; when you are starting from essentially having no clue about anything relevant at all, as is the case in Afghanistan and the US.
“Concern is the word of the day starting with government mandated EV solutions, regulations that will ban gas stoves, looting, and piss poor public education in big cities.”
One night last week, 12 businesses were burglarized in Glendale CA, in 3 separate groupings. Police caught up with the burglars as they looted the third group of businesses.
Last night, i heard on the news that today, no bail for misdemenors and certain non violent felonies, is supposed to go in effect today in L.A. County. 12 cities filed a lawsuit against the policy, with the hope for more to join. A sheriff’s deputy was murdered outside the station last week and the mother & fiance of the deputy are outraged that D.A. Gascon refused to seek the death penalty, Gascon falsely claiming he sought the highest penalty allowed by law. The law allows the death penalty for killing a police officer, but Newsom has a moratorium on executions, which not preclude a death sentence, as it is just a personal gubernatorial moratorium.
Oh, and YT’s Maverick of Wallstreet, just moved from San Diego to Las Vegas. One of his clients said he was leaving SD in 2 months.
I’d be interested to learn what costs the auto insurers have sustained w/regard to EVs. I’ve heard anecdotal reports of insurers totaling out EVs b/c of fear of damage to battery packs bit have yet to see hard, industry -wide data.
My EVs cost less to insure than the gas cars I replaced them with. Probably because Tesla makes the safest cars and by far the most expensive auto insurance costs are related to injuries. Not damage to the cars.
In Illinois Gotion Inc., a company with ties to the Chinese Communist Party, is set to receive $8 billion in taxpayer subsidies to build a $2 billion battery factory in Manteno, Illinois thanks to Governor Pritzker. Funny how the media ignores it.
link to wirepoints.org
Please name a country that DOESN’T get Subsidies to build a new factory and create new jobs in that state?!?!
Stop Fudding up the nonsensical hysteria. You WANT them to build the factory in the US…NOT in China. More jobs HERE, less jobs in China. More stuff made HERE less stuff made in China. More supporting businesses HERE in the US, Less supporting jobs in China. MORE taxes from this supporting industries HERE in the US, Less in China.
This isn’t Rocket Science…the more Industry, Manufacturing and Supporting Businesses HERE in the US, the Less being built in China.
It’s the same way China grew, now being slowly reversed.
Cheers!
8 Billion in subsidies to build a 2 billion dollar plant; nonsensical hysteria, yeah right.
Ford is smart for licensing the technology to speed up times and reduce cost to produce EV’s. They need to catch up to Tesla, not compete with GM.
If Biden rules against the 7500 credit then Fords next move should be produce EV cars with these batteries anyway and then declare bankruptcy and simply get the government to underwrite the whole thing anyway (ie the 7500 credit) since Ford like GM will get bailed out.
CATL batteries aren’t just cheaper, the main advantage is improved self-ignition resistance. Very important when used in critical installations such as airplanes.
Screw this ‘mandated’ ev crap. And banning gas stoves? Who the hell are these morons? Id almost rather get ww3 going. It seems were screwed either way.
And speaking of ww3, with all the bad relations between the US and China over issues such as Tawain- exactly how smart is it to stop all domestic drilling and rely mostly on China for our future transportation mfg needs? We’re destroying ourselves. Oh yeah…..the US and Chins are going to start bombing each other and trade flows like normal. Morons.
These “morons” can read a chart or two from reliable sources. The latest update from Exxon Mobil on crude oil supply has moved its peak from 2050 in the 2010’s to around 2030 in their 2023 “View to 2050” report:
link to corporate.exxonmobil.com
Anything below the maroon area is used for transportation. Why do you think that this government is pushing incentives???
Natural Gas follows in about 15 to 20 years with its own peak:
link to corporate.exxonmobil.com
This is why this government is trying to steer people away from using Natural Gas where alternatives are available. We have very important industrial needs that need to be sustained using natural gas.
No one is being mandated to buy an EV. Did you know there’s nothing stopping you from buying a gas powered car?
McC kicked the can down for 45 days.
“Representative Republic” is an absolute SHAM and it is a SHAME that people continue to Vote for Congess Persons (who supposedly are to represent us) who are ALL for this bullshit in the Ukraine, Endless “Wars on Terror” and Wars on Leaders of other Countries that do not toe the line – you know, the HEGEMONY bullshit.
We have the best government money can buy
No, money won’t buy the best government. Hunter got a nice car and a big diamond and Menendez got a car and lots of gold. Even the government is turning sour on the USD for buying thier votes.
Seriously the only government $ (taxpayers $) that should go to this battery factory is a tax exemption for a limited number of years. That will give the industry enough time to see if the factory and local production is competitive against both Chinese batteries and against petrol cars.
Quit the nonsense. EVs are already competitive against “Petrol Cars”. Since you’re not saying “Gasoline or Diesel” you’re probably full of baloney anyway. The US Industry licenses technology from nearly EVERY country or advanced manufacturing process in the world.
Politicians are corrupt from BOTH US Parties. The only way to correct that is remove Citizens United, install Campaign Finance Reform and Term Limits.
Batteries are very heavy, just like automobiles. Build factories on each continent, and in major markets, which the US certainly is one. Stop shipping as many heavy things halfway around the world SEVERAL times and then wasting the resources to do so.
Chinese cars will be popular around the world, at least until there’s a Big War involving them. They may be way less popular in the US because of Hawk-like Rhetoric coming from politicians who are on the payroll from Big Auto, Big OIL, etc.
Build factories in the US, create jobs in the US to replace the ones that are going to be lost. Every other car and battery making country already has some car / truck factories in the US.
David Ricardo’s Law of Comparative Advantage states that even if a trading partner subsidizes its industry to gain an advantage in trade it is still worthwhile to continue trading because the consumer gets lower prices and saves money to put into a productive asset. This means that we shouldn’t mind if China subsidizes its industry to undercut ours because, well because somehow it works out in the end somehow. In a non-Ricardian world that would matter but we live in a Ricardian world so it doesn’t matter doesn’t it?
If Brazilian beef cost half of US beef, one can buy twice the amount of beef and store the it in belly fat. But since everybody’s doing the same, the US beef goes extinct. Eventually, Brazil finds better market for it’s beef, and the US beef eaters go hungry, and loose all that fat and then some.
See, Richardo was spot on, it all works out in the long run.
Do you have any real world examples of this pessimistic view. It has never happened before.
The existence of rust belts for example.
It’s a THEORY of Comparative Advantage. NOT a Law.
Most Economic Theories break down when taken to extremes.
Monopolies, CARTELS, Oligopolies, etc. plus Strategic Military / Intelligence / Security Concerns, etc. can cause relying on comparative advantage purely to become disadvantageous…if not downright dangerous or destructive.
I’ve owned shares in mining companies long enough to know that the “10 or 15 years” to start or expand a mine is a buncha baloney in most countries in the world.
In many countries and places friendly to the US, it’s amazing what can happen when mining companies are already operating one type of mine that has another mineral or metal in that mine. It goes from being One type of mine to the more valuable type of mine (or both) in a hurry.
GM leadership may be incompetent but somehow Tesla keeps securing enough minerals and metals from around the world. There’s MORE than enough Lithium globally, it’s not all from China, mostly they need more refineries for lithium.
People acting like EVs aren’t going to happen and QUICKLY by spewing Fossil Fuels FUD would be hilarious…because it’s ALREADY taking over the rest of the developed world…except they’re shooting themselves, American Workers and American Industry / Manufacturing in the foot, because Europe, China, etc. have already kicked the US’s butts in getting things moving.
Completely Ironic because the best and fastest growing Pure EV Company is American and the US is already wired for Electricity to pretty much every single building in the country.
Lucy lived in a Ricky Ricarian world. Speed up the chocolate conveyor! As with anything, the law of comparative advantage doesn’t matter until it does. A boom doesn’t matter until the bust. Piling up tens of trillions of dollars in government debt doesn’t matter until it does. Suddenly, multiple unions are going on strike or threatening to. Kaiser Permanente threatening the largest health care strike, ever, according to the news. Protestors complained in Downtown L.A. yesterday, of high rent and low paying jobs, they say makes living here, unaffordable to them.
What is life like in a rust belt? Does it matter to people who live in a million $ house in a silicon valley or a Washington D.C. beltway, flush with tax payer cash?
Chinese lead in battery manufacturing is because they got a big head start. Not because of government subsidies. BYD actually started out as a battery maker for cell phones. Now they’re the biggest car maker in China.
It all looks to me like Chinese are engaged in illegal research and development rather than following the leader in financial engineering.