The car industry may pay the consequences sooner or later disagreements between the US and China which the respective governments formulate as political measures of economic protection. The exclusion of Chinese manufacturers from US incentives reflexively triggered a reaction that could have far-reaching effects. According to rumors coming from the Asian media, China is going to shrink, up to stop the export of graphite, necessary for the production of lithium-ion battery anodes. But that’s not all, because this is how China could dictate the rules of the market even beyond its borders, especially in countries where it has channeled a mountain of capital into local battery production. A way to bypass blockages further down the supply chain, exploit the vast reserves of minerals over which it has gained control in recent years.
CHINA AIMS TO REGULATE THE EXPORT OF CRITICAL MATERIALS
The Chinese government is working on graphite export provisions, according to the Nikkei Daily. If approved, it would be a new attempt to strengthen control over strategic materials, as has already happened with other indispensable raw materials. PUSH graphite plays a vital role in electric cars especially in the anodes because contributes to the ability to store and release energy during charge and discharge cycles. The fact that China currently produces 65% of the world’s graphite and controls more than 80% of the anode market for automotive batteries (according to US Geological Survey data), leaving little room for interpretation: cell manufacturers and vehicle manufacturers will continue to be tied to China, including by setting up plant manufacturing facilities.
IMPACT ON THE EUROPEAN MARKET AND EU INVESTIGATIONS ON CHINESE MANUFACTURERS
Along with the restrictions, Chinese manufacturers are investing Significantly in expanding their presence globally. The construction of anode factories in Finland and Swedish assembly plants is a clear attempt to consolidate China’s leadership in the production of batteries for electric cars within the EU. The European Union responded by launching an anti-subsidy investigation into Chinese electric vehicles. The aim is to evaluate whether Chinese subsidies are harming the European automotive industry. The restrictions that China is developing could hurt the EU investigation.
IMPACT OF CATL AND THE GLOBAL ROLE OF CHINESE BATTERIES
One of the most concrete and current examples is China Contemporary Amperex Technology Co. Ltd., better known by its acronym CATL, at the top of the list of major battery manufacturers for electric cars. Well, CATL opened a plant in Germany in December 2022 with an investment of 1.8 billion euros and another in Hungary in August 2022 with an investment of 7.4 billion euros. In addition to various Chinese automobile brands, CATL has already entered into supply or cooperation agreements with many OEMs and companies around the world, including Honda, Mercedes-Benz, Daimler, Stellantis, Daihatsu, Vinfast, BMW, Bosch, Ford, ZF, Fisker, Volkswagen, Volvo, BASF (for recycling and disposal of used lithium batteries) etc.
The fact that China has an advantage in all strategic sectors of the global market for batteries and electric vehicles raises questions about the security of the global supply chain. The lack of chips has taught us the importance of diversification but lithium batteries are a strategy that China has been working on for a long time.
