Federal EV Incentives To Give Tesla, General Motors a Boost. America Is Catching Up.
Batteries are pulling ahead of gasoline in the race to power personal transportation.
Now the Federal government is looking to give the electric vehicle industry another gear in its battle with traditional cars.
This past week, the House Ways and Means Committee began marking up — or rewriting–the $3.5 trillion reconciliation legislation, dubbed the Build Back Better bill.
There is a lot in the early language for the EVs–incentives that should boost sales in years to come.
The legislation is very long, and other details are likely lurking in the text.
The bill is still a work in progress with more negotiation by lawmakers due in coming weeks. On balance, this is close to what EV investors have been expecting.
Investors, going into trading this week, can expect a positive reaction, but not a wildly positive one.
Investors will take whatever they can get, though.
And incentives in the U.S. bode well for the future of the EV industry. More incentives should help the U.S. catch up with EV sales compared with Europe and China.
EVs sales in China are up about 221% through the first eight months of the year, compared with 2021, according to Citigroup analyst Jeff Chung.
EV sales have accounted for roughly 10% of new car sales so far this year.
China has a number of monetary and non-monetary incentives in place for the EV industry.
Buyers qualify for purchase incentives and EVs, in certain regions, also get favorable driving privileges and registration benefits.
EV penetration of new car sales in Western Europe is roughly 10%, varying from country to country.
More than 50% of new cars sold in Norway in 2020 were electric.
Norwegian EV incentives include vehicle price reductions, ongoing tax reductions and discounts on things such as parking and tolls.
EV penetration in the U.S., so far in 2021, has amounted to about 3% of all new light-vehicle sales.
To date, the U.S. has incented EV purchases with a mix of federal and state purchase tax credits.
China will encourage market consolidation in the electric-vehicle sector, an industry it has nurtured for years amid the breakneck growth of greener transportation, the country’s industry and information technology minister said Monday.
In addition to improving charging infrastructure and electric-vehicle mileage, China’s EV sector must “embrace the market,” Xiao Yaqing said in a press conference Monday, translated by Chinese state-owned channel CGTN.
This will allow many small and scattered firms to “concentrate their industrial practices,” the minister said.
“The role of the market should be fully utilized and we encourage merger and restructuring efforts in the EV sector to further increase market concentration.”
China’s electric-vehicle market is the world’s largest, with manufacturers benefiting from government subsidies to promote greener transportation.
Tesla is competitive in China, but a consolidated domestic sector could pose a new challenge for the high-profile electric-vehicle company.
Glencore boss warns of future China dominance in electric vehicles
US and Europe risk being left behind unless they secure cobalt supplies for batteries, says Ivan Glasenberg.
The car industry in the US and Europe risks being left behind by their Chinese rivals unless they secure supplies of cobalt, according to the world’s biggest producer of the key battery metal.
Glencore chief executive Ivan Glasenberg told the FT Future of the Car Summit on Wednesday that western carmakers would be naive to think they could always rely on China to supply the batteries for electric vehicle fleets.
Glasenberg said Chinese companies had been quick to realise the vulnerability of their supply chains and “tied up” lots of cobalt from the Democratic Republic of Congo.
Cobalt is a metal needed in the lithium-ion batteries used in longer-range electric vehicles. “The western companies have not done it.
They either don’t believe this is an issue or they believe they are definitely going to get the batteries from China,” Glasenberg said.
“But what happens if that doesn’t occur and the Chinese say we are not going to export batteries, we are going to export electric vehicles.
Where are the batteries going to come from?”
The warning comes as a global chip shortage puts the car supply chain under the microscope and follows a 50 per cent increase in the price of cobalt in the past six months.
Produced as a byproduct of copper and nickel mining, more than 60 per cent of the world’s annual cobalt output of 130,000 tonnes comes from the DRC, one of Africa’s poorest countries.
Chinese companies already control about 40 per cent of the DRC’s output and have also signed long-term supply agreements with Glencore, the only major western miner operating in the country.
China has also built a dominant position in cobalt processing and is investing directly in mines.
Earlier this year CATL, the Chinese battery group that has a market value of $130bn, paid $137m for a 25 per stake in China Molybdenum’s Kisanfu copper-cobalt mine.
Glasenberg said Glencore would consider selling a stake in one of its DRC mines to a western carmaker, although it had not received any approaches.
Personally, I believe it would be a great idea.
If you look historically, Henry Ford did it.
He tied up his supply chain, whether it was rubber plantations . . . or iron supply in Brazil.”
Glencore is expected to produce about 35,000 tonnes of cobalt this year, a figure that could increase by 25,000 to 30,000 if the company decides to develop a new ore body at Mutanda, a mothballed mine in the DRC.
“I think that will come on stream in the next 18 months,” said Glasenberg.
Asked if he was concerned about a shift to lower cobalt content in batteries, Glasenberg said this would be more than offset by explosive electric vehicle sales growth.
Inga hydropower could be key to the green electrification of Africa
The Inga hydropower scheme in the Democratic Republic of Congo (DRC) could be the key to the green electrification of Africa, according to a new report from Wood Mackenzie.
Could the project also be a catalyst for the development of vast underutilised resources, creating a centre for low carbon metals production?
Benjamin Franklin, one of the founding fathers of the US, once said that “energy and persistence conquer all things”.
Should the potentially truly transformational 40 GW Grand Inga and 4.5-12 GW Inga III projects come to fruition, never will the phrase have seemed more apt, Kettle points out.
The various Inga hydropower projects have been a dream of development planners for decades.
Yet their sheer scale, coupled with the complex politics involved, mean their progression and ultimate delivery involve not only far-sighted vision but heroic persistence, Kettle writes.
“And while there is an obvious pun implied by using Franklin’s quote, it is no less true that energy will be required in abundance if the project is to succeed.”
A hydropower project of huge scale
The scale of Inga is immense – both in terms of generating capacity and cost.
The various projects have the potential to dwarf the vast Three Gorges Dam hydro scheme in China, which has an installed capacity of ‘only’ 12GW.
Grand Inga alone, Kettle says, would more than double Africa’s hydropower generation capacity.
Capital costs for the various Inga schemes are equally eye-watering, ranging up to $100 billion for Inga III and Grand Inga combined.
So will it go ahead?
The current status, as Wood Mackenzie reports, is that in June 2020 the DRC government presented the project proposal to African regional heads of state, with the aim of establishing the scale of potential demand.
So far, South Africa has indicated a willingness to buy 2.5 GW, with Nigeria indicating interest in procuring 3 GW. A further 1.3 GW is targeting the Katanga mining area in the DRC.
While fully exploiting the potential of the Inga Falls has long been a dream of ambitious development planners, events have recently taken a turn towards reality.
In June 2021 it was announced that Australian Fortescue Metals Group mining magnate Andrew ‘Twiggy’ Forrest had been granted, subject to final discussions, exclusive rights to develop the Grand Inga project.
FORTESCUE METALS GROUP MINING MAGNATE ANDREW FORREST HAD BEEN GRANTED, SUBJECT TO FINAL DISCUSSIONS, EXCLUSIVE RIGHTS TO DEVELOP THE GRAND INGA PROJECT
So, what is different now, compared to previous attempts to get the Grand Inga project off the ground?
Firstly, Kettle points out, the world has changed in the wake of the pandemic.
“We are now inexorably locked on a lower carbon trajectory and there is a desire to build back better with a more equal distribution of wealth,” Kettle says.
“Secondly, Andrew Forrest has a vision of a hydrogen future and there are few, if any, undeveloped green energy sources of the scale of Grand Inga.
To match action to the rhetoric the Fortescue Metals Group announced the establishment of Fortescue Future Industries, which has been dubbed its ‘green arm’.
Press reports have indicated that the Inga development would include the construction of port infrastructure with green hydrogen and green ammonia production facilities.”
A hydropower-fueled paradigm shift in Africa?
While $100 billion is an enormous amount of money, given Inga’s potential impact — and in the context of an estimated $50 trillion total bill for the energy transition — it arguably represents good value, Kettle asserts, adding that there is no doubt that politics will play a huge part in how that value is distributed in terms of supplying the resultant green electrons across the continent.
“Not withstanding the broader cross-border political wrangling that will no doubt ensue, there is also the important issue of how best to harness Inga’s energy to capture value.
Africa has long made clear its ambitions to reduce the export of raw ore and add value to its under-developed natural resource base,” Kettle says.
“Various governments have hatched plans over the years to process ore into metal, thereby creating jobs and keeping more of the wealth within their borders.
Many of these plans have failed due to a lack of economic energy supply.
Combine the global drive to reduce carbon emissions with the opportunity to supply low-carbon electrons on a scale that can meet continental needs and in my view you create the catalyst for a new paradigm.”
