US Federal Government to spend $3 billion to boost electric vehicles and battery production in USA

Highlights :

  • Funding under the new plan will be utilized as ‘grants’ for building and expanding manufacturing of batteries, battery components and battery recycling facilities.
  • The decision is motivated by the fact that the demand for electric vehicles and stationary storage alone is projected to increase the size of the lithium battery market five to ten fold by the end of the decade.

The administration of the US President Joe Biden has announced that a $3.1 billion plan will be formulated to give a fillip to the manufacturing of domestic electric vehicles batteries to expedite the transition of the USA from gas powered vehicles to electric vehicles.

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The per capita greenhouse gases’ emission in the USA is the highest in the world. The transportation sector of America alone emits about one-third of its emissions annually. Hence, the Biden Administration believes that electrification of its transportation sector is crucial for mitigating climate change.

The Department of Energy had held that the funding under the new plan will be utilized as ‘grants’ for building and expanding manufacturing of batteries and battery components. Grants will also be made for battery recycling facilities. The funds will come from President Joe Biden’s bipartisan infrastructure law signed last year which had a total fund allocated of $1.2 trillion. The law includes over $7 billion for enhancing the US’s battery supply chain for electric vehicles production.

Announcing the availability of the grants, the U.S. Department of Energy said, “With the demand for electric vehicles (EVs) and stationary storage alone projected to increase the size of the lithium battery market five- to ten-fold by the end of the decade, it is essential that the United States invests in the capacity to accelerate the development of a resilient supply chain for high capacity batteries.”

Minerals used in electric vehicle manufacturing are scarce. Last month, Joe Biden had invoked the Defense Production Act to encourage domestic production of minerals needed to make batteries for electric vehicles. The same order may help companies to obtain federal funding for feasibility studies on projects aimed at mining of the minerals like lithium, nickel, cobalt, graphite and manganese needed for electric vehicle production.

“These made-in-America batteries are going to help reduce emissions and create opportunities across the country,” said Gina McCarthy, White House National Climate Advisor during a press brief.

The federal government wants half of its auto sales by 2030 to be of electric vehicles. It’s also expanding its electric vehicle charging infrastructure and working to create tax incentives for the buyers of electric vehicles. The US government also wants to replace its fleet of 600,000 cars and trucks with electric vehicles by 2035.

“Positioning the United States front and center in meeting the growing demand for advanced batteries is how we boost our competitiveness and electrify our transportation system,” U.S. Secretary of Energy Jennifer M. Granholm.

At present, the United States is the third largest market of electric vehicles in the world. It stands behind China and Europe. At present, only 4 per cent of the new cars sold in the country last year were electric vehicles.

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