Could there be a US-China Cold War? More batteries?

The shortage of superconductor supply chain and the chip war between the United States and China have become the ubiquitous background of the technology industry in recent years. Especially in the past few months, technology tensions between the United States and China have escalated significantly. The launch of the US flea law, the imposition of new licenses on US companies selling artificial intelligence chips to China and, most recently, the news that any US company applying for funding under the CHIPS Act will be prohibited from making new investments in China. China for no less than ten years, have all helped entrench the two superpowers in a showdown over one of the fundamentals of the future economy. But there are signs that a new front in this tech war may be about to open up: the battery war.

Although there is a continuous development of smarter, greener and more efficient graphene batteries which should revolutionize the way we obtain energy in the future, for the most part right now the process of trading gas-guzzling oil and planet-destroying diesel-powered cars with electric vehicles rely on rechargeable lithium batteries. Which is good, except the price of lithium is skyrocketing – ironically, partly in response to the increased need for the element to power electric vehicle batteries.

And some five best lithium refiners in the world, it is true that the first company is based in North Carolina – but after that the next two largest refiners are Chinese companies, followed by one based in Chile and one in Australia.

Enter Musk, chased by the headlines…

Nobody called it a resource war, but now the world’s favorite tech junkie, Elon Musk, has announced that Tesla may be getting into the business of refining American lithium on the Gulf Coast of Texas. It would be a way to not only increase – and probably, since it would be Musk in the chair – increase significantly – the amount of lithium refined in the United States. And it would have several side effects. By increasing supply, even if it was from one of the major electric vehicle manufacturers, it would reduce the overall crisis in global lithium demand and thus reduce the price that other refiners – including those based in China – could charge for the element at the heart of the batteries that power the electric vehicle revolution.

This could lead to greater availability of lithium for EV manufacturers at all levels, and potentially even lower EV prices that could speed up the process of replacing gas-guzzling EVs – a necessary step to try to combat the ongoing effects of man-made climate change.

It could also lead Tesla, the company that makes electric vehicles from Musk’s engine, to benefit from a significant tightening of its control over a central ingredient in its production process. As everything in Tesla vehicles is currently tested and pushed to a far higher maximum than most other pure electric vehicles on the market right now – including distance per charge – Tesla refining its own lithium would likely lead to the development of Tesla-specific batteries that were tuned to extract every last ounce of charge from Tesla-refined lithium.

Moving the process forward

The company has also pledged to use reagents that are less harmful to the environment compared to standard lithium hydroxide refining and to create usable by-products, rather than chemical waste, if it secures its planned site at the Texas.

So not only would any Tesla move into U.S. lithium refining give the company a serious market advantage by freeing it, at least to some extent, from the vicissitudes of the international lithium supply chain. , but it would also allow Tesla to dominate its emerging rivals. in the manufacture of electric vehicles. If the Texas site were just the first of several Tesla lithium refineries, it would even be possible for Tesla to become a global net supplier of lithium to potential competitors. And, potentially, it could lower the overall price of lithium in the market, allowing more EV makers to put vehicles on the road.

Naturally, all this would not be enough to make the owner of Tesla happy. The application for the Texas refinery site, which was forwarded to the local controller’s office so that a decision can be made on the subject, would be subject to the granting of a relief from the local property tax.

While in any normal day and age this could be considered to require both PB and J in addition to the agreement, there is strong reason to believe that waiving these taxes could make sense. for everyone. First, while the Gulf Coast of Texas has always been an oil-rich region, Musk and Tesla’s investments in the replacement because oil could begin to build a new economic – and ecological – future for Texas, especially if the refinery is just the first of many.

Potential advantages of Biden?

And while the Biden administration likely has relatively little sway over the decisions of the Texas Comptroller’s Office, it could be highly motivated to support Texas for lost property tax revenue, particularly because the move of Tesla could open a new front in the technological field. cold war with China – a front rooted in the supply of lithium-based EV batteries.

Supporting the refining of greener, cleaner domestic lithium hydroxide to power Tesla-branded electric vehicles might just be something that would be in the White House’s interest, especially since most Teslas worldwide are made in the USA. There is a factory in Shanghai which has the capacity to manufacture up to 750,000 vehicles per year, but which is dwarfed by the combined potential output of the factories of California, Nevada and New York – and Austin, Texas.

So the potential for Tesla to get whatever it wants seems high, especially given the potential it could bring to start a battery war for another one advanced technology of 21st century, perhaps giving the CHIPS Act time to take effect and begin to correct the semiconductor imbalance between China and the United States.