Tesla, considered a symbol of electric vehicles, is being caught in a storm of public opinion in China. The U.S.-China dispute behind it has alerted the international community that Xi Jinping is not only relying on the “factory of the world” to push forward his war-wolf diplomacy, but also laying out plans to seize the high ground in new energy, especially electric vehicles and batteries, in a bid to gain more say in the international arena.
Solid-state battery breakthrough in the U.S. battery industry, but can not escape the shadow of the Chinese Communist Party
In October last year, an all-solid-state lithium battery was officially produced and delivered by the Colorado-based battery startup Solid Power. This was a long-awaited breakthrough for the U.S. new energy industry, as solid-state batteries can store more energy while being safer to charge and use.
As reported by Wire China in April this year (link), solid-state batteries solve some of the fundamental flaws of lithium batteries, and their technology is not complicated, but the difficulty lies in mass production. The success of Solid Power’s research and development has made the eight-year-old company, which has received strong support from the U.S. government, an immediate industry leader.
Workers at a Ford Michigan auto plant install a battery pack for a Ford plug-in hybrid in 2011.
Whether Solid Power’s breakthrough will lead a comeback for the U.S. battery industry remains to be seen, but it still hasn’t made it out of the shadow of the Chinese Communist Party.
According to Wire China, Solid Power’s success was made possible by a 2016 U.S. government patent license for lithium-sulfur chemistry, as well as $31 million in grants and contracts; the company also raised about $70 million in funding from a wide range of investors. Solid Power would not disclose the rights that Wanxiang A123 has to it.
A123 was once the most advanced lithium battery maker in the U.S., receiving favorable treatment from the Obama administration and hundreds of millions of dollars in investment, but eventually went bankrupt in 2012 and broke through the Obama administration’s Committee on Foreign Investment in the United States (CFIUS) review and was sold to Wanxiang Group for $257 million.
The Wire China quoted experts as saying that the U.S. government invested heavily and got nothing for it, only to do the Chinese Communist Party’s bidding.
Wanxiang is a Chinese private company with close ties to the Communist Party, and its late founder, Lu Guanqiu, was praised by Xi Jinping on several occasions and accompanied him on his trips to the United States.
Wanxiang’s investments in the U.S. have focused on new energy batteries and automobiles, not only buying A123 and electric car maker Fisker, but subsequently investing through A123 in startup battery company Solid Power and ionic materials company Ionic Materials in 2017 and 2018; the latter two are technology leaders in the U.S. solid-state battery sector.
According to the July 2019 disclosure on Ionic Materials’ official website (link), Wanxiang A123 and Ionic Materials jointly announced that month a milestone progress in all-solid-state battery development.
With the advanced technology acquired from the U.S., Wanxiang Group has quietly bent the curve and grown into a giant predator lurking in the new energy battery industry.
According to the mainland media, Wanxiang A123 was selected as the power battery supplier for SAIC-GM BEV2 project in 2017 and had been awarded a USD 1 billion order, although the above news was deleted from Wanxiang’s official website after it was rumored, it was not denied.
According to Shanghai Securities News on March 17 this year, (link) Feng Sihan, CEO of auto giant Volkswagen Group (China), confirmed that Wanxiang A123 became a power battery supplier for VW and will start supplying in the next 2 years.
China has taken the lead in the electric vehicle and battery industry
The changes of A123 and Wanxiang have become a microcosm of the new energy industry in the U.S. and China over the past 10 years.
According to Wire China, battery companies like A123 received huge investment from the U.S. government and advanced technology, but lost out on infrastructure and manufacturing capacity in the U.S. CFIUS intervened in Wanxiang’s acquisition of A123, but eventually let Wanxiang go after A123 declared bankruptcy.
Doug Campbell, CEO of Solid Power, has said bluntly that he is the only dynamic startup left in the U.S. battery industry.
The report also quoted experts as saying that despite tensions between China and the US, it has been difficult for the US to get rid of China in the battery supply chain.
Compared to the U.S., the Chinese Communist Party’s plan appears to be much more far-reaching. As early as the 12th Five-Year Plan (2011-2015), the CCP regarded new energy vehicles as a key development focus, not only introducing the Energy Conservation and New Energy Vehicle Industry Development Plan (2012-2020), but also extending the new energy vehicle subsidy policy implemented in the previous three years in 2013; at that time, each new energy vehicle At that time, each new energy vehicle could enjoy a maximum subsidy of 66,000 yuan from the central and local governments combined.
Workers produce power batteries in Xinwanda’s electric vehicle battery factory in Nanjing, China, March 12, 2021.
China’s annual sales of new energy vehicles were only 17,600 in 2013, but with the support of subsidies and other financial policies from the Chinese Communist Party, sales soared to 330,000 in 2015, making it the world’s largest market for new energy vehicles in one fell swoop. According to the China Association of Automobile Manufacturers, China’s new energy vehicle production reached 1.366 million units last year.
Driven by the electric vehicle industry, China’s battery industry has also grown considerably and has taken a dominant position in the world. UBS Securities latest report shows that Chinese companies in the field of automotive power batteries, occupying about 60% of the global market share; in the field of battery materials accounted for an even higher proportion, up to 80%.
Biden administration to catch up with new energy fears are not easy
On April 20, U.S. President Joe Biden visited online the electric vehicle and battery production plant of U.S. electric bus manufacturer Proterra. According to Reuters, Biden said after the tour that the U.S. must increase electric vehicle production to catch up with China.
However, the U.S. media “Politico” published an article on the same day (link to the report), pointed out that the Biden administration wants to develop electric vehicles, but faces the dilemma of battery shortage.
According to market analysts Canalys, Chinese automakers will sell more than 1.3 million passenger electric vehicles in 2020, while the U.S. will sell only 328,000.
Comparing power batteries to oil, Politico reports that the U.S. is lagging far behind China in manufacturing batteries as the battery generation approaches, making it difficult to meet Biden’s ambitious climate and electric vehicle goals.
According to British price data provider Benchmark Mineral Intelligence, the U.S. currently has only three major battery plants, and will only increase to 10 by 2030, when China will have 140 plants. to meet demand.
Politico reports that the minerals needed to make the batteries, as well as legal restrictions, make Biden’s plans for an electric car industry a practical dilemma.
In fact, it’s not just batteries that are an obstacle; a lack of charging pads has also curbed the development of the U.S. electric vehicle industry.
The $2.3 trillion infrastructure plan proposed by the Biden administration in late March set aside $174 billion for the U.S. new energy vehicle industry, including a $15 billion investment to build 500,000 public charging pads.
Data from market data site Statista.com shows that the number of public charging piles in the U.S. was about 100,000 as of February this year. Chinese industry data shows that by the end of last year, the number of public charging piles in China was about 807,000 units. The ratio of public charging piles in China and the United States is 8:1.
In addition, Biden earlier directed the federal government to review the supply chain for key products such as pharmaceuticals, semiconductors, rare earth metals and electric car batteries, hoping to reduce U.S. dependence on foreign manufacturing. However, the Obama administration has previously implemented similar measures, but in the end to no avail.
Communist China is holding key mining sources hostage to promote the “communistization of batteries”
Much of China’s leadership in new energy batteries is based on its control of key minerals.
The production of batteries requires key elements such as cobalt and lithium, as well as rare earth metals. And mining and refining these minerals can be extremely polluting and risky.
Among them, lithium mines are mainly located in Australia and South American countries, but the control has fallen into the hands of the Chinese Communist Party.
According to the U.S. Department of Energy’s December 2020 report (link), China has a sole share of 80% of global lithium battery production capacity, with the U.S. in second place at only 8%.
The same is true for elemental cobalt. U.S. mineral giant Freeport-McMoRan, for example, once owned several world-class copper and cobalt mines in the Democratic Republic of Congo, but sold 56% of its Tenke Fungurume copper and cobalt mine and 95% of its Kisanfu copper and cobalt mine to Chinese companies in 2016 and 2020 for $2.65 billion and $550 million, respectively “China Molybdenum (also known as Luoyang Molybdenum)”.
Both of the Congolese copper and cobalt mines sold by Freeport are among the largest copper and cobalt mines in the world. With this, Luoyang Molybdenum has become one of the world’s largest cobalt producers. Luoyang Molybdenum is a typical example of a reformed Communist Party state-owned enterprise, nominally a private enterprise but controlled by the Communist Party’s State-owned Assets Supervision and Administration Commission.
On April 11 this year, Luoyang Molybdenum announced a strategic stake in Ningde Times, a leading Chinese power battery company, to participate in the development of the Kisanfu copper-cobalt mine in Congo, which it acquired last December.
According to the data of China GGII (link), Chinese battery companies have the first global market share, and among the top 10 companies in the global power battery installation in 2020, Chinese companies occupy 6 seats, namely: Ningde Time (26.0% of the global market share), BYD (6.6%), AVIC Lithium (2.8%), Vision AESC (2.5%), Guoxuan Hi-Tech (2.4%) and Yiwei Lithium (2.4%). 2.4%) and Yiwei Li-energy (0.8%), with a combined market share of 41.1%.
The joining of Chinese battery giants and mineral giants means that CCP’s dominance in the global supply chain of new energy batteries has been further strengthened.
In an April 11 article in Germany’s Capital Magazine, rare earths, lithium, cobalt and other minerals were referred to as the new oil, and the CCP was compared to the new Saudi Arabia. The article said that while 70% of global cobalt production comes from Congo, 2/3 of cobalt refining capacity is in China.
According to the article, among the major lithium producers such as China, Australia, Chile and Argentina, only Australia is a friend of the United States; there has been an “oil war” in history, and there may be a “mineral conflict” in the future.
Senior U.S. Senator Marco Rubio (R-FL) warned in an April 12 article that Biden’s climate policy is a big gift to the Chinese Communist Party. Rubio said the centerpiece of Biden’s climate plan is a shift to “clean energy,” which means buying millions of solar panels, electric car charging stations and other expensive green infrastructure, all of which are produced by industries dominated by the Chinese Communist Party.
The Wall Street Journal reported on March 28, citing a new report by consulting firm Wood Mackenzie (link) that by winning the clean energy race, the Chinese Communist Party could not only break away from its dependence on foreign energy sources, but also dominate the resources and technologies needed to “decarbonize” the world.
The concerns of politicians and the international media about new energy competition are not unfounded.
According to a Feb. 15 report in the Financial Times (link), the Communist regime has not yet abandoned its plans to cut off rare earth supplies to combat the United States. In January, the Ministry of Industry and Information Technology (MIIT) issued a public consultation on the Rare Earths Regulations (Draft), which tries to restrict rare earth exports.
During the Trump administration’s trade war against the CCP, the CCP began to study and develop a rare earth strategy to counter foreign sanctions, and official media even directly advocated playing the “rare earth card” to pressure the United States.
In 2010, after the East China Sea dispute between China and Japan, the Chinese Communist Party restricted the export of rare earths to Japan, causing Japan and the United States to begin diversifying their supply sources in an attempt to reduce their dependence on the Chinese Communist Party’s supply chain.
Former Deputy National Security Advisor Matt Pottinger told a hearing of the U.S.-China Economic and Security Review Commission on April 15 that the Chinese Communist Party is strengthening its supply chain advantage, “weaponizing” trade and using economic coercion to achieve more political goals.
Bo explained that the Communist Party first used massive subsidies, non-tariff barriers and intellectual property theft to reduce Beijing’s high-tech imports and make other countries heavily dependent on China for high-tech supplies.
Current affairs commentator Li Linyi analyzed that the U.S. new energy and battery industries now face a dilemma, and that “the Biden administration is not on the same page as the CCP with Xi Jinping and the CCP’s layout.”
“Worse still, Xi Jinping’s layout of new energy and key minerals should be aimed at more than just electric cars and batteries, and is likely to hold the world hostage like the promotion of muzzle diplomacy and vaccine diplomacy to establish an international order and rules dominated by the Chinese Communist Party’s power.”
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