US President Joe Biden has signed an Executive Order to review US supply chains, with a particular focus on key sectors of the US auto industry. The 100-day review will cover semiconductors, rare earth metals and batteries for electric vehicles.
The initiative is meant to address “a global chip shortage impacting industries ranging from medical supplies to electric vehicles”. The White House goes as far as comparing the supply chain issues in EV production to the supply chain problems for medical goods recently under the Covid pandemic: “Last year’s shortages of personal protective equipment (PPE) for front-line healthcare workers at the beginning of the COVID-19 pandemic were unacceptable. Recent shortages of automotive semiconductor chips have forced slowdowns at car manufacturing plants, highlighting how shortages can hurt U.S. workers.”
Next to the technical boost the analysis of the supply chain would bring, the Biden administration also points out that “making our supply chains more secure can also be a source of well-paid jobs for communities across our country”.
The investigation itself will cover a 100-day review across federal agencies to address vulnerabilities in the supply chains of “four key products”. These are not limited to electric vehicle production or recycling, but do play an important role. APIs in pharmaceutical companies will be addressed to prevent “API production facilitators supplying the U.S.” moving offshore, as currently, more than 70 per cent of this market has moved away from the continental USA. As the pandemic showed, concentrating manufacturing capacities abroad can be problematic when travel and trade become restricted, or the needs of the manufacturing nations outweigh the benefits of selling the product.
More interestingly for the EV business, is the analysis in the area of “critical minerals”. Considering the importance of chips and technology in “defense, high-tech, and other products”, the USA wants to ensure they are no longer dependent on foreign sources for rare earth materials, as well as materials such as carbon fibre.
Another factor relevant to EV production is the area of Semiconductors and Advanced Packaging. The United States claims the fame of being the birthplace of this technology. “However, over the years we have underinvested in production—hurting our innovative edge—while other countries have learned from our example and increased their investments in the industry.” Biden clearly wants to catch up on the ground lost during the Trump administration, which mostly invested in outdated combustion technologies and undermined technological development in the EV industry. An important update here was also restoring the ability to allow states to legislate their own emissions targets, which had been the cause of a lawsuit between California and the Trump administration.
The fourth issue the executive order is addressing is batteries: In particular, large capacity batteries used in electric vehicles. As Biden had previously announced with the Green Deal, the government is taking action to tackle the climate crisis. The expectation in the USA is that the knowledge that our planet and species survival depend on less CO2 being spewed into the atmosphere will lead to large demand for new energy technologies like EV batteries. Here the government plans to identify supply chain risks, in order to “accelerate U.S. leadership of clean energy technologies”. Additionally, the U.S. has sizeable lithium reserves and could expand manufacturing know-how to include domestic battery production.
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