The China-versus-the-world battle for EV supremacy will dominate the automotive landscape for the foreseeable future
Author of the article:
David Booth
Published Jun 07, 2024 • Last updated Jun 07, 2024 • 7 minute read
![Motor Mouth: The EV battery wars are just getting started (1) Motor Mouth: The EV battery wars are just getting started (1)](https://i0.wp.com/smartcdn.gprod.postmedia.digital/driving/wp-content/uploads/2023/09/china-battery-EV-factory-assembly-copy.jpg?quality=90&strip=all&w=375&h=211&sig=hQ8SEHPaPp4ywr0_6nVpyA)
With all the hoopla surrounding the tariffs the American government will levy on Chinese electric vehicles, less attention is being directed at the introduction of similar tithes on the batteries that power them. Indeed, at first blush, only increasing the tariffs on EV-specific batteries and their components to 25% (up from 7.5%) while EVs will now see an incredible 100% tariff (up from 25%) would seem nonsensical.
Advertisem*nt 2
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
We apologize, but this video has failed to load.
Try refreshing your browser, or
tap here to see other videos from our team.
Motor Mouth: The EV battery wars are just getting started Back to video
We apologize, but this video has failed to load.
Try refreshing your browser, or
tap here to see other videos from our team.
After all, China’s ability to produce batteries cheaply — Steve Levine of The Electric puts the price of a Chinese-built LFP battery at US$66 per kilowatt-hour, roughly half the cost of a NMC battery here — is the main reason why Chinese BEVs are so much cheaper than those built in North America. So taxing them less than the cars themselves would seem nonsensical, were it not for that fact that North American car-makers — like all automakers around the world, in fact — are inordinately dependent on Chinese components.
China’s complete dominance in battery production
Although EV battery production in North America is significant — and, thanks to the Inflation Reduction Act, growing quickly — China’s dominance in the processing of minerals as well as the production of the individual components that go into building battery cells and modules would seem at first almost insurmountable, if not permanently, then at least in the time we’ve allotted for electric vehicles to account for the lion’s share of automobiles sales.
Learn more about the cars
2024 Tesla Model 3 4.25out of 5 MSRP $50,990 to $69,990 2023 Chevrolet Bolt EV 4.00out of 5 MSRP $38,943 2024 Ford F-150 Lightning 4.20out of 5 MSRP $59,995 to $112,495
Advertisem*nt 3
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
According to the Wall Street Journal, “the U.S. and China are in a David-and-Goliath situation when it comes to battery production.” So, while China assembles more than two-thirds of the world’s EV batteries, its dominance in component production and mineral processing may be even larger. It produces, for instance, 91% of the anodes that go into automotive batteries; and 78% of the cathodes (this last extremely important, since cathodes are the most important and costliest part of an EV’s battery).
And, in perhaps its greatest advantage, China processes 44% of the world’s lithium, as well as 69% of the nickel sulfate; 75% of the cobalt; 69% of the synthetic graphite; and a whopping 100% of the spherical graphite that goes into all the world’s EV batteries.
Advertisem*nt 4
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
What those numbers fail to capture is why China has such a lead. According to the Journal, not only do Chinese producers have a huge technological advantage in the mines-to-vehicles manufacturing processes, but there are far fewer bureaucratic roadblocks in getting approval for said mines and manufacturing plants than in either North America or the E.U. No wonder, then, that of the world’s 10 largest battery producers, six — including the most prolific, CATL — are Chinese.
China’s overcapacity
![Motor Mouth: The EV battery wars are just getting started (7) Motor Mouth: The EV battery wars are just getting started (7)](https://i0.wp.com/smartcdn.gprod.postmedia.digital/driving/wp-content/uploads/2024/06/China-battery-CATL-Beijing-auto-show-copy.jpg?w=288&crop=1&strip=all&quality=90&sig=qQBdwxnMkaIonkxvx0O2hQ)
What’s troubling is that China is not only already the dominant player in EV batteries, but that its goal is seemingly to overwhelm all those looking to develop their own battery-production supply chains. “What is clear,” says the Journal, speaking on Chinese industry more broadly, “is that, since 2021, Chinese companies have invested more in manufacturing than usual, even though domestic demand and exports have often been weak. The trend has been especially stark for certain sectors that are favoured by Beijing and often benefit from subsidies, such as EVs.”
Advertisem*nt 5
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
Nowhere is that more apparent than in battery production. Indeed, while prices of Chinese battery exports have dropped dramatically since the softening in global demand for EVs, “Chinese manufacturers are preparing a historic surge of supply.” According to the Financial Times, “production capacity at China’s battery factories is expected to reach 1,500 gigawatt hours this year.” That’s enough for 22 million BEVs, says the Times, more than twice current demand, which stands at 636 GWh. By 2027, that divergence will widen even more, with production reaching as much as 4,200 gigawatt-hours, almost triple the 1,500 GWh needed for its expected domestic EV market.
Perhaps more troubling is the Times’ assertion that these Chinese battery giants are following the pattern established in the steel, aluminum, and solar-panel industries, which have used domestic subsidies to grab a “huge share” of the global market and squeeze out international competition.
Advertisem*nt 6
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
Recommended from Editorial
- Motor Mouth: Cheap Chinese EVs may head to Canada before U.S.
- Motor Mouth: Will the economy or environment decide the future of cheap EVs?
Even worse, say authors Harry Dempsey and Edward White, “regions of China are racing against each other to take advantage of government subsidies and become production epicentres for batteries in anticipation of surging future demand, risking a glut of production.” In other words, if the Times’ numbers are right, Chinese battery manufacturers will soon be producing enough batteries to power 40 million more EVs than their market can consume. American and European politicians and automakers are right to be worried to be worried.
Indeed, while the U.S. has been fixated on the low prices of EVs, European regulators have been specifically targeting that overcapacity in its negotiations with China. Countering such concerns was in fact the major focus of Xi’s recent visit to Paris, the country’s president proclaiming there is no “so-called problem of Chinese overcapacity,” the implication that China’s dominance in EVs — and other green technologies — is simply the result of superior products and pricing. Most interesting, however, is that, while seemingly condoning Chinese manufacturing internationally, Xi, as recently as March, warned green industries about over-expansion.
Advertisem*nt 7
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
China’s governmental consistency
![Motor Mouth: The EV battery wars are just getting started (10) Motor Mouth: The EV battery wars are just getting started (10)](https://i0.wp.com/smartcdn.gprod.postmedia.digital/driving/wp-content/uploads/2024/06/China-Xi-Jinping-president-copy.jpg?w=288&crop=1&strip=all&quality=90&sig=bXasrex82Ii57riweUDJNw)
Despite that admonishment, perhaps the biggest advantage China has is consistency. One can argue — with some veracity — that China’s rampant push to overcapacity will eventually end in tears. Certainly, the same kind of government largess applied to the housing market has wreaked havoc in its domestic construction industry. But at the very least, China’s electric-vehicle and battery manufacturers can count on their government staying the course. The guidelines are set and, if Xi’s legislative record is any indication, the auto industry can count on them remaining in place through thick or thin.
America’s current EV policies, meanwhile, marry rampant protectionism — and all the downsides that brings — with an inconsistency that is possibly even more detrimental than the policies themselves. Like immigration, gender identity, and even social security, everything about electric vehicles — from their ability to reduce carbon emissions to the massive incentives promoting their manufacture and purchase — has become politicized.
Advertisem*nt 8
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
On one hand, there’s a bill fronted by erstwhile Democrat Joe Manchin and Republican Marco Rubio — if ever a gang of thieves — claiming that the Inflation Reduction Act is not protectionist enough; while, on the other, Donald Trump — who is looking ever more likely to be elected — wants to dismantle the whole thing because, well, EVs are not popular with his base. Such capriciousness makes long-term planning impossible, and makes up part — perhaps even a large part — of the reluctance of some automakers to fully commit to EVs.
The fallout
![Motor Mouth: The EV battery wars are just getting started (11) Motor Mouth: The EV battery wars are just getting started (11)](https://i0.wp.com/smartcdn.gprod.postmedia.digital/driving/wp-content/uploads/2023/09/trump-UAW-auto-workers-union-rally-3.jpg?w=288&crop=1&strip=all&quality=90&sig=Vl6XVcOtgmHQVmJApnG-4w)
The market distortions in this war for EV dominance are incredible. Managed economies are pitted against protectionist policies, all being driven by disparate EV mandates, the whole quagmire complicated even further by increasing consumer disinterest.
Advertisem*nt 9
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
The first thing to understand are that said mandates are, in and of themselves, inflationary. Marry them with the free-spending Inflation Reduction Act that would benefit brands like Tesla, Ford, and GM, and these recent tariffs and, according to Good Car, Bad Car, we can expect the prices of EVs to increase 10% to 15% in the near-term, just another price hike feeding the inflation the U.S. is still struggling to contain. In economist-speak, we have governmental fiscal policy (subsidization and protectionism) fighting the central banks’ monetary policy (the high interest rates we’ve all been subjected to in a quest to reduce inflation). Such are the quandaries when governments try to make engineering decisions.
Advertisem*nt 10
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
Article content
![Motor Mouth: The EV battery wars are just getting started (12) Motor Mouth: The EV battery wars are just getting started (12)](https://i0.wp.com/smartcdn.gprod.postmedia.digital/driving/wp-content/uploads/2022/01/Carlos-Tavares-CEO-Stellantis.jpeg?w=288&crop=1&strip=all&quality=90&sig=Wy8s6NiychSnDsRlW-HCjA)
Then there are the industry repercussions. The call for tariffs in the E.U. are, at present, far less strident than in America, mainly because European automakers gain as much as 20% of their revenues either from Chinese sales or production. Besides, Automotive News Europe recently cited a Rodium Group report that says “automakers such as BYD have enough margin built into their European prices to absorb even 30% tariffs.”
Even amongst American automakers — OK, quasi-American automakers — there are signs of a rift. Stellantis CEO Carlos Tavares has come out against the tariffs, noting that his company “will try to be Chinese ourselves, which means instead of being purely defensive vis-à-vis the Chinese offensive, we want to be part of the Chinese offensive.” Stellantis recently penned a deal with China’s Leapmotor, the first between a Western and Chinese carmaker, says Reuters, “designed to sell and produce EVs from a Chinese manufacturer outside China.”
As Tavares says, the auto industry is in “a Darwinian period.”
Sign up for our newsletter Blind-Spot Monitor and follow our social channels on Instagram ,Facebook and X to stay up to date on the latest automotive news, reviews, car culture, and vehicle shopping advice.
David Booth
David Booth is Driving’s senior writer as well as the producer of Driving.ca’s Driving into the Future panels and Motor Mouth podcasts. Having written about everything from the exact benefits of Diamond Like Coating (DLC) on motorcycle camshafts to why Range Rovers are the best vehicles for those suffering from opiod-induced constipation, Booth leaves no stone unturned in his quest for automotive veritas. Besides his long tenure with Driving, he was the editor in chief of Autovision magazine for 25 years and his stories has been published in motorcycle magazines around the world including the United States, England, Germany and Australia.
Education
Graduating from Queen Elizabeth High School in 1973, Booth moved to from his Northern Quebec home town of Sept-Iles — also home to Montreal Canadiens great, Guy Carbonneau, by the way — to Ottawa to study Mechanical Engineering at Carleton University where he wrote a thesis on the then burgeoning technology of anti-lock brakes for motorcycles and spent time researching the also then burgeoning use of water tunnels for aerodynamic testing.
Experience
After three years writing for Cycle Canada magazine and another three working for the then oldest magazine in Canada, Canadian Automotive Trade, Booth, along with current Driving writer, Brian Harper, and then Toronto Star contributor, Alex Law, created an automotive editorial services group that supplied road tests, news and service bulletins to what was then called Southam newspapers. When Southam became Postmedia with its purchase by Conrad Black and the subsequent introduction of the National Post, Booth was asked to start up the then Driver’s Edge section which became, as you might suspect, Driving.ca when Postmedia finally moved into the digital age. In the past 41 tears, Booth has tested well over 500 motorcycles, 1,500 passenger cars and pretty much every significant supercar of the last 30 years. His passion — and, by far, his proudest achievement — however is Motor Mouth, his weekly column that, after some 30 years, remains as incisive and opinionated as ever.
Personal
Booth remains an avid sports enthusiast — that should be read fitness freak — whose favourite activities include punching boxing bags until his hands bleed and running ski hills with as little respect for medial meniscus as 65-year-old knees can bear. His underlying passion, however, remains, after all these years, motorcycles. If he’s not in his garage tinkering with his prized 1983 CB1100RC — or resurrecting another one – he’s riding Italy’s famed Stelvio Pass with his beloved — and much-modified — Suzuki V-strom 1000. Booth has been known to accept the occasional mojito from strangers and the apples of his eye are a certain fellow Driving contributor and his son, Matthew, who is Global Vice-President of something but he’s never quite sure what. He welcomes feedback, criticism and suggestions at David@davebooth.ca
Learn more about Author
Comments
You must be logged in to join the discussion or read more comments.
Create an AccountSign in
Join the Conversation
Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.
Trending
- Honda Canada announces 2025 Civic Sedan pricing, including hybrids
- Alternative Universe Car-Casting: 7 leading car roles that almost went to a different machine
- 2025 Subaru Forester: Boxy, but good (very good, actually)
- 17,000 Dodges, Rams recalled in Canada over stability control
- Survey says many EV owners want gasoline cars next time
POPULAR VEHICLE COMPARISONS
Read Next
Driving.ca's Blind-Spot Monitor
All things automotive: breaking news, reviews and more. Wednesdays and Saturdays.
By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails or any newsletter. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300
Latest from Gear Guide
- Best Camping Gear for Summer 2024 Equipment for those of us hitting the great outdoors this summer
with Video
May 23, 2024 Gear Guide
- 7 Essential, 6 non-essential accessories every mom wants in her car You don't need a holiday to do something nice for mom; stock up her car with these essential car accessories
with Video
May 4, 2024 Gear Guide
Advertisem*nt 1
Story continues below
This advertisem*nt has not loaded yet, but your article continues below.
- Best Car Organizers To Declutter The Cabin Discover some of the top-rated car organizers that will help declutter the car and arrange belongings for a hassle free drive
with Video
March 26, 2024 Gear Guide
- Best Tools For DIY Tire Swaps Changing tires twice a year, it won’t take many seasonal swaps to pay for your investment
with Video
Brian Turner March 28, 2024 Corner Wrench
- Everything you need to know about bike racks for your vehicle There are tonnes of bicycle-carrying options for Canadians who love two wheels as much as four
August 12, 2020 More Features