Lithium chemical plants need to be close to battery material plants, which need to be close to battery plants, which ideally should be close to car manufacturers, which ideally should be located in one of those big car markets.
Australia simply does not have either big enough population or market to support such a huge industrial cluster.
Yes, we can still force companies to build domestic production facilities through subsidies, tariffs or even banning certain product import completely, at the expense of the whole country’s competitiveness.
This does not only apply to the EV battery supply chain. It applies to many other industrial products.
One way around this is to attract 100 million foreign workers to live here, then Australia would be a truly BIG country and many things would be possible.
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