Home » America Is About To Subsidize The Hell Out Of Its EV Battery Industry

America Is About To Subsidize The Hell Out Of Its EV Battery Industry

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Howdy pardners, and welcome back to The Autopian’s morning roundup of auto industry news! It’s Wednesday, Feb. 1, and we’re in a good mood because we’re coming off this site’s biggest readership month yet. Thank you for your continued support, we have some cool things to announce here soon and that’s all because of you fine people.

For now, let’s dive into today’s news: President Biden’s Inflation Reduction Act could be a bigger effing deal than expected, Hyundai and Kia get back on track, Toyota’s top scientist fires back at EV evangelists and Americans aren’t doing great on the car repossession front.

The EV Tax Incentive Boom For Battery Manufacturing Could Be Even Bigger Than Predicted

2021 Mustang Mach E Gt Performance Edition
2021 Ford Mustang Mach-E GT Performance Edition available early fall 2021. (Closed course. Professional driver. Do not attempt.)

We begin today with a scoop from Axios‘ Joann Muller, who reports that the tax breaks for automakers and battery manufacturers under the IRA might just be significantly more than even Congress initially anticipated. In case you’ve been living under a rock, the legislation passed last year resets and modernizes the EV and PHEV tax credits, adds credits for used cars for the first time, and incentivizes the production of both cars and batteries in this country because manufacturers that produce abroad won’t qualify for the credits. (It’s also been a giant, confounding mess on a lot of fronts, but hey, that’s the federal government for you.)

A big goal of the IRA is to build a homegrown battery and EV manufacturing infrastructure so that industry isn’t entirely ceded to China. And so far, early projections indicate the plan is working.

Axios reports the Congressional Budget Office projected the tax credits specifically for battery manufacturing would equal about $30.6 billion over 10 years; new research from Benchmark Mineral Intelligence indicates it could be more like $136 billion over 10 years, if not higher than that thanks to Tesla’s new battery plant plans. Hot damn.

This number seems to include both car companies and battery manufacturers building facilities in the U.S. to take advantage of the credits.

A few notable details from that story:

  • Tesla’s Nevada plant, for example, will soon be able to produce 100 gigawatt-hours of battery cells, and that could grow to 500 gigawatt-hours in the future. At an annual production rate of 500 gigawatt-hours, the credits would be worth a staggering $17.5 billion per year.

  • Ford expects more than $7 billion in tax breaks from 2023 to 2026, with CEO Jim Farley predicting a “large step-up in annual credits” starting in 2027 during a recent earnings call.

  • GM chief financial officer Paul Jacobson told reporters that the automaker will earn about $300 million this year, with the credits eventually being worth $3,500 to $5,500 per vehicle.

Now, here’s where you might be saying, “We shouldn’t be subsidizing electric vehicles! The government shouldn’t be picking winners and losers, the market should sort all of that out!” Sure, in theory. But remember government intervention in energy markets is one of America’s proudest traditions and we already subsidize the oil and gas industry in a huge way, although that amount will be handily trumped by the EV subsidies if this latest research proves true.

A way to modernize America’s green energy operation and add manufacturing jobs, or a giant tax break gift to big corporations? How about both?

Hyundai And Kia Mount A Comeback

2024 Hyundai Kona Rear

Last year was a pretty brutal one as automakers fought through the chip shortage and supply chain issues, but things are finally starting to improve on the production front. Case in point, according to Automotive News: Hyundai and Kia posted some sales wins on the back of EV demand and fleet sales. It’s not huge yet, but it’s something:

Hyundai said retail sales rose 1 percent to 48,247 last month. The company said it ended January with 45,158 cars and light trucks in stock, up from 37,379 at the end of December and 18,060 a year ago.

Kia set a January record and said five models – Niro, Sportage, Telluride, Carnival and Forte – also posted record deliveries for the month. Combined deliveries of Kia’s electrified vehicles jumped 128 percent.

Genesis also reported record January sales of 3,905, a 7.3 percent gain.

Also, good for Genesis here. That brand makes some really good stuff these days but it still feels kind of under the radar, even if it shouldn’t. Anyway, inventory is getting back on track, but the economy is squirrely and interest rates could go up a bit, which could put people off from actually buying all these new cars in stock. Fun times.

Toyota’s Scientist Hits Back At ‘EV-Only Extremists’ But That’s Not The Whole Story

2023 Bz4x Limited Awd Heavymetal 042
Photo credit: Toyota

On his way out the door, one gets the sense Toyota CEO Akio Toyoda is none too happy that his company’s been saddled with this anti-EV, anti-green image. And who can blame him? But Toyota’s later to the game on EVs than most rivals and its hydrogen push has gone absolutely nowhere.

Now, in Automotive News, the automaker’s chief scientist is hitting back against those who say “EVs are the only way forward in the global battle to cap carbon dioxide emissions.” I have some issues with this piece that I’ll explain, but first, Toyota’s Chief Scientist Gill Pratt at Davos last month:

Toyota’s chief scientist, Gill Pratt, argues that with lithium as scarce as it is, automakers can reduce carbon emissions more quickly through a multipronged approach to electrification that includes widespread deployment of hybrids, rather than by focusing exclusively on fully electric vehicles. His math acts as a rebuttal to those proposing bans on new vehicles that use any gasoline or diesel in the mission to slow global climate change.

“Time will show that our point of view is actually the correct one,” Pratt said at a roundtable here. “One way or the other, there will be a diversity of powertrains used throughout the world.”

That story’s worth a read in full because it hits on a lot of issues related to the EV boom that aren’t exactly clean or pretty, like the potential scarcity of lithium (not to mention the nastiness involved with mining the stuff.)
But my issue is that it’s hard to take Toyota on good faith here. It may now say that its balanced, diverse approach to future powertrains is the way forward, but—and as this story fails to mention—we must remember Toyota actively lobbied Congress to delay EV adoption for years as part of its big hydrogen push. And Toyota fought hard against stricter car emissions standards in the U.S. and Japan. As that NY Times story I linked to reported, Toyota’s actually been lagging behind rivals in fuel economy gains for years now, falling behind Ford and General Motors, even.
Basically, it’s hard to see Toyota’s arguments as anything more than justifying its own bottom line, and my take is that it’s dressing that up in a fancy way to deflect EV investments. We’ll see which approach the new guy takes here[Ed Note: I don’t think all automakers building 100 kWh battery-powered EVs right away is the fastest or even best way to clean up automotive pollution, and I agree with Toyota’s main points in the quote above, but PG’s context is of course good to keep in the back of your mind. -DT]. 

Americans Have A Car Repo Problem, Again

Car Dealership
Photo credit: “Row of Cars at a Car Dealership” by everycar_listed_photos is marked with CC BY-SA 2.0.
Finally, besides potentially stemming new car sales, what do these rising interest rates, layoffs in multiple industries and record-high car prices mean for drivers? Nothing good, honestly. Here’s Bloomberg on the growing repossession rates, now higher than 2009 when everyone was still mired in the Great Recession:

Now, more Americans are falling behind on their car payments than during the financial crisis. In December, the percentage of subprime auto borrowers who were at least 60 days late on their bills rose to 5.67%, up from a seven-year low of 2.58% in April 2021, according to Fitch Ratings. That compares to 5.04% in January 2009, the peak during the Great Recession.

Higher interest rates are making it even more difficult to make the monthly payments. The average new auto loan rate was 8.02% in December, up from 5.15% a year earlier, according to Cox Automotive. The rate can be much higher for subprime borrowers.

I know the easy thing to say is “Don’t buy above your budget,” and nobody should. But that can be incredibly hard to do with skyrocketing inflation and the occasional crisis that may upend your ability to pay bills.

It doesn’t help that America’s car-centric infrastructure means most people need a car to get to work, leading to stories of people like this poor 2013 Honda Fit owner who’s hiding her car from creditors, or the guy with a 26% interest rate on a 2013 Dodge Journey. We’re all feeling the sting these days.

The Flush: What Are Your Thoughts On Toyota’s Chief Scientist’s EV Pushback?

Is a mixed powertrain lineup the best way forward right now? In the near future? In the distant future?

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BobWellington
BobWellington
1 month ago

It’s a shame all this money going towards EVs can’t go towards something much better for the environment and society like trains and cycling infrastructure.

SquareTaillight2002
SquareTaillight2002
1 month ago

PHEV vehicles are a good compromise solution until battery material availability and efficiency improves. However, a large percentage of PHEV owners never plug in their car.

Many purchased them for the tax credit or HOV lane access and lack the access, ability or just inclination to use the EV part of the machine. They just use it like a plain old hybrid. Good, but not good enough.

https://insideevs.com/news/630341/plug-in-hybrids-arent-being-plugged-in-study/#:~:text=If%20you%20don't%20plug,exhaust%20fumes%20into%20the%20environment.&text=It's%20honestly%20no%20surprise%20that,and%20then%20not%20charging%20them.

Marc Miller
Marc Miller
1 month ago

Interesting narrative from Toyota. I wasn’t a history major, but studies in “What Did We Do with This Stuff When We Were Done?” might prove fascinating. We didn’t know what we would do with the leftovers from atomic work other than burying them. We didn’t know what would happen when we created all sorts of un-recyclable plastics and then when overwhelmed we dumped them into the ocean. We didn’t know the impact of what I call “cars without filters” before catalytic converters and unleaded fuel. And here we are in the middle of trying to make history and occasionally wondering what we will do with all the batteries when they no longer hold a charge. Who picks out the recyclable bits from all those little cells tied together when done? What happens when people don’t want to pay recycle fees and chuck them in the nearest pond?

I remember being in college and there was no car. I had a bicycle. I had friends who sometimes gave me rides. Used Greyhound several times. The two examples in the Bloomberg article were driving 2021 models. Someone at a dealer conned them into believing this would be the best choice because a newer car won’t need more maintenance. If you don’t have the dough for a car, get a motor scooter and wait until you have a higher and more reliable income. I would never share a car payment with a roommate that I wasn’t joined to by marriage. At times, there’s no shame in being on less than four wheels.

Uncle D
Uncle D
1 month ago

I’m only interested in purchasing a BEV because there are so few serial PHEVs available (high efficiency ICE to extend the range of your fully electric drivetrain). I don’t want an entire ICE drivetrain with all of the moving parts and maintenance when I could have a short range EV that has a small ICE on board to extend my range when needed or give a little more HP from time to time. Give me at least 50 miles of battery range and that would cover nearly all of my transportation needs. When I need to make a longer trip a few times a year, the ICE is there to extend my range.

Strangely enough, I’m also OK with adding a small battery and motor to an ICE vehicle to boost performance. Mercedes is doing this to add 200 more HP to their already stout 4-cylinder turbo. They end up with more HP/torque than the bi-turbo V8 they’re replacing and better gas mileage. Different context, different solution.

b3n
b3n
1 month ago

Unpopular opinion: the switch to EVs is going to cause more harm to the environment than it will reduce.
Because it isn’t replacing the oil industry. It’s adding a new industry on top of it, compounding the environmental damage and emissions.
Oil is needed for an insane amount of products, not just transportation. About 30% of all oil goes to industrial use, such as plastics, chemical plants, even the asphalt we drive on.
So it isn’t going anywhere anytime soon, think 100+ years.
Then there are 1.5 billion ICE vehicles out there.
Even if we aren’t replacing all of them at once, it will create lots of extra CO2 emissions as EV production is a lot more emissions-intesive.
Then we haven’t even factored in the production of electricity, of which not an insignificant portion comes from non-renewables like natural gas powerplants, or even worse, coal and diesel powerplants.
We are really just offsetting tailpipe emissions at a great cost.
I have a really hard time believing there is significant CO2 savings to be had in this entire replacement process at all.

MrLM002
MrLM002
1 month ago
Reply to  b3n

Yeah, honestly even if you ignore the whole ‘The creation of BEVs is responsible for more emissions than ICE cars’ argument in its entirety the amount of oil we don’t use for ICE fuel is obscene and unlikely to go away in my lifetime.

The damage microplastics have caused likely won’t be realized before its effects have crippled people.

Acting like going to 100% BEVs will get rid of Oil is nonsense.

Brian Ash
Brian Ash
1 month ago
Reply to  b3n

I share similiar view and there are so many other points to mention. My thought is mankind will eradicate itself before the planet becomes inhabitable.

Interesting article
https://www.aljazeera.com/opinions/2023/1/29/greening-ourselves-to-extinction

Lambolm002
Lambolm002
1 month ago

No one wants to say the emperor has no clothes… oh wait, Toyota’s Chief Scientist just said it.

05LGT
05LGT
1 month ago

The scientist from Toyota is entirely correct. He’s also full of shit. I love TMC for making (some of) the last of the NA V8’s and the GR line and TRD, but that’s not a prong on the electrification effort.
The best way forward ignoring consumer wants is improved mass transit and shared vehicles. As a consumer I don’t want that. PHEV’s offer very low exhaust emissions for most short drive commutes with smaller battery packs. Instead of hauling unused battery you’re hauling a mostly unused engine, fuel tank, cooling system etc. But zero range anxiety, lower buy in cost, most days mostly electric… If purchasers have freedom to choose, this is the best way short term. Long term I like BEV, better charging times and availability, and cleaner electricity sources. Solar, wind, storage and nuclear please. Sell H2 to places without adequate infrastructure.

jblues
jblues
1 month ago

I am holding off on possibly trading in my Mustang to see if the repo-pocalypse actually happens next year. Car prices are waaaay too high right now.

Second point: Places like California, where they think wishes come true, apparently, are in for a huge awakening when they mandate EVs and discover they’ve been writing checks their electrical grid can’t cash.

GranulatedMiscarriage
GranulatedMiscarriage
1 month ago
Reply to  jblues

There will be a glut of American made ICE vehicles in California soon, when David complete his move

TerryBowling
TerryBowling
1 month ago

Big Tech Companies announced Job opportunities for everyone! Work from the comfort of your home, on your computer And you can work with your own working hours. You can work this job part-time or As a full-time job. For more info check here………. https://m5.gs/bXpwTk

MrLM002
MrLM002
1 month ago

I agree with the Toyota engineer. Currently Maverick Hybrids make up ~73% of orders and yet Ford says they can only make 35% of their Mavericks with the Hybrid powertrain (last year they said they could only make 20% of their orders hybrids). The percentage is down from 80% last year likely due to Ford allowing Hybrid orders to convert to the ecoboost drivetrain and in exchange they only have to wait for a month or two most of the time vs a year+ for the Hybrid.

The Maverick Hybrid has a 1.1kWh battery pack.

The F-150 Lightning has a 98kWh or 131kWh battery pack.

That means at the minimum you could 89 battery packs with the same capacity as the Maverick battery pack for every 1 F-150 lightning you chose not to make.

89+ Regular people buying Hybrid Pickups that get 42 MPG city/ 33 MPG Highway reduces emissions from exhaust much more than 1 Rich person buying a 5 seat Full size short bed super crew F-150 lightning (the only seating, cab, and bed configuration available for the Lightning).

Manwich
Manwich
1 month ago

Regarding Toyota:
“Toyota’s chief scientist, Gill Pratt, argues that with lithium as scarce as it is, ”

He’s wrong. Lithium is not scarce or rare.
https://energyx.com/blog/will-we-run-out-of-lithium/

And the truth is that in the future, we will get a lot of lithium through battery recycling.

In addition to that, even if Lithium does get to be too expensive due to short supply, there are other options depending on the application.

For example, Sodium Iron battery tech is on the horizon for stationary power applications where durability and low cost matters more than weight:
https://batteryuniversity.com/article/bu-218-summary-table-of-future-batteries

And Nickle-based batteries could have a resurgence at some point in the future as well for some applications:
https://batteryuniversity.com/article/bu-215-summary-table-of-nickel-based-batteries

Shifting to BEVs doesn’t absolutely mean they will always have lithium-based batteries.

Let’s not forget that the 1990s-tech GM EV1 with NiMH batteries was able to get as much as 140 miles of range out of a charge.

If someone took that original EV1 design and applied modern electronics, modern electric motors and if some R&D was put into improving the NiMH cells themselves, NiMH could once again become an option for BEVs and other applications.

Lithium batteries are used right now because they are the best option.

But that could change in the future for at least some applications.

Brian Ash
Brian Ash
1 month ago
Reply to  Manwich

Even at the high estimates for lithium reserves is 21M tons, a ton is good for about 10 EVs at current battery capacities, so thats 210M EVs. There are 1.5B cars in the world. World wide there are about 100M new every year, at 100% EV thats 2 years worth. How is there enough lithium? Not even taking into consideration EV Semi’s which prolly need 10x the battery of a car. Reserves might be higher but then you are talking mining techniques really bad for the environment.

Expecting magical battery tech to appear to meet the 2035ish EV goals is a pipe dream, cause even if there was better tech with less natural resources it would be exp as hell and need outrageous subsidies.

Manwich
Manwich
1 month ago
Reply to  Brian Ash

“Even at the high estimates for lithium reserves is 21M tons”

That’s false. 21 million is just for Bolivia alone. If we look at the top 6 countries:
https://www.nsenergybusiness.com/features/six-largest-lithium-reserves-world/

… it’s over 64 million tonnes… or over 71 million tons

“, a ton is good for about 10 EVs at current battery capacities”

1 ton = 2000lbs

So you’re saying there is 200lbs of lithium in every BEV?

That’s false.

It’s more like 25 lbs:
https://www.nationalreview.com/corner/just-how-clean-and-green-is-your-electric-car/#:~:text=Today%2C%20a%20typical%20EV%20battery,aluminum%2C%20steel%2C%20and%20plastic.

Which is to say that a ton of Lithium is enough for at least 80 BEVs.

And when we look at the reserves of the 6 top countries with lithium, 64 million tonnes converts to about 141,095,847,798 lbs. And given that in REALITY, the typical MODERN BEV pack uses 25lbs of lithium, from just these 6 countries (and without doing any extra exploration or getting any supply back from recycling), we have enough lithium to cover 5,643,833,911 vehicles… 5.6 billion vehicles.

If 1.5 billion vehicles need to be replaced, then we have enough lithium from just 6 countries to replace all the vehicles in the world with BEVs… at least 3 times over… even with the Tesla Semi replacing all conventional trucks. And that can be done even if no recycling is done or no additional reserves are found.

“Expecting magical battery tech to appear to meet the 2035ish EV goals is a pipe dream”

No magical tech is needed. All that is needed is for SOMEONE TO DO THEIR HOMEWORK AND NOT SPREAD ANTI-BEV BULLSHIT.

OverlandingSprinter
OverlandingSprinter
1 month ago
Reply to  Manwich

The measured and indicated reserves at Thacker Pass alone is 13.7 million tons. The nsenergybusiness.com source cited is dated in 2020, which does not mention Thacker Pass.

Lithium reserves are like oil reserves: We know what we can extract now, and haven’t looked everywhere yet so we will likely find more. There might be reasons to avoid EVs, but lack of lithium isn’t one of them.

Brian Ash
Brian Ash
1 month ago

Regardless of if there is enough supply of Lithium or other resources EV’s need, the question should be is it a good idea. The green path to saving the planet, if it needs saving or can be saved, should be with better initiatives than battery EVs. 50 years from now the current EV strategy is likely to be looked at negatively.

Bolivia and its Lithium resource, so its ok for evil powers that be to plunder and take advantage of them, most of it is already backdoor locked up by China.

Enough EV resources may exist for the next 20yrs plan, but the US & Europe may not be able to access it, as most of it China already has made alliances for it over the past 10yrs. Like I said wars over oil will just shift to wars over EV resources. Find a better plan to reducing greenhouse emissions than pushing one rooted in evil & greed.

Brian Ash
Brian Ash
1 month ago
Reply to  Manwich

Most Tesla’s contain about 50-75kg of lithium. Amount of lithium per kWh is about .75kg Current reserves 21M, potential other resource 90M. Your assuming everything can or will be mined, what’s the environmental impact?!?! Thackler pass may not be in the 90M, but it’s not approved yet, Native Americans are fighting it.

Mercedes EQS 120 kWh, Ford Lighting 130, battery, Hummer 200, Tesla Semi 1700. Nobody is making tiny BEVs outside of China.

Its not ANTI-BEV BS. The battery EV is a stupid idea and there is NOT enough lithium to electrify all the cars, trucks, SUVs, trucks, semis, farm equipment, etc in the world. What about nickel, cobalt, graphite, etc….. We are destroying the world to save it, typical modern short sightedness. EV push is driven by power & greed by some of the horrible powers that be in the world, nothing less.

I’ve owned an EV for 5+ years.

Manwich
Manwich
1 month ago
Reply to  Brian Ash

“I’ve owned an EV for 5+ years.”

Uh huh… suuurre you have.

“Its not ANTI-BEV BS”

And right after saying that, you proceed to spout more anti-BEV BS…

WhatMe
WhatMe
1 month ago

We do 3 times (maybe 4) a week a trip of 14 miles in total (22km). About once a month we go to family that’s 200 miles back and forth. We don’t need to haul a large ass battery around 90% of the time. I totally see the argument for a (plugin) hybrid

Somewhat Like a Rock
Somewhat Like a Rock
1 month ago

Wouldn’t it be much easier to just dominate the market in synthetic fuels?

nemebean
nemebean
1 month ago

“automakers can reduce carbon emissions more quickly through a multipronged approach to electrification that includes widespread deployment of hybrids, rather than by focusing exclusively on fully electric vehicles.”

“Basically, it’s hard to see Toyota’s arguments as anything more than justifying its own bottom line”

I actually think both things may be true. While Toyota was out hyping hydrogen and spurning EVs, their hybrid division was doing some pretty great stuff. Once Toyota realized the hydrogen thing wasn’t going to work out, someone looked around and said, “Hey, wait a minute, didn’t we already solve this whole emissions reduction thing like 20 years ago when we built the Prius?”

In the end, I think what he’s saying is correct. PHEVs are probably the short and possibly mid-term solution to emission reduction. It’s funny to me that multiple manufacturers have apparently accidentally stumbled onto the right path with hybrids. Someone claimed the other day that Ford expected 80% of Maverick sales to be non-hybrid, and in reality it’s been exactly the opposite. Toyota can’t keep the Prime versions of their vehicles in stock. Turns out people like to buy cars that are not terribly expensive, give them significant fuel economy gains, and make them feel a little better about their impact on the planet. Who knew?

Boxing Pistons
Boxing Pistons
1 month ago
Reply to  nemebean

Very well put. I’ve said the same thing a few times. I look at it in terms of resistance and immediate benefit. A BEV gets a ton of resistance because people would need to change their lifestyles to accommodate it. EV evangelists telling people what they actually need is a shit approach. People who don’t want to change their lifestyles will continue to burn a crap ton of gas while they wait for an EV with 1000 mile range that costs less than $30k. Instead, they could be driving PHEVs using very little to no gas during their normal daily driving, but be able to take a long trip without worrying where to charge. Oh yeah, and in doing this many will be convinced that they truly can get by with a BEV as they rarely start the gas engine.

Nerobergstr
Nerobergstr
1 month ago

With today’s charging infrastructure an EV is actually a binary distributed PHEV. By that I mean if an EV does not meet your entire trip requirements, you drive an ICE vehicle with no EV benefit. I think what Gill is saying is that a PHEV can meet 100% of your trip requirements today and because most trips are short, the EV/ICE mileage ratios can actually be better with an PHEV than a pure EV….he’s not wrong, but as range and DCFC infrastructure improves that advantage goes away. I think that advantage has been disappearing faster than Toyota anticipated and now they are late with EVs. My opinion.

Drew
Drew
1 month ago
Reply to  Nerobergstr

Yeah, I ran the numbers with my Niro PHEV and usage against an Ioniq 5, and the PHEV wins on convenience (fuel and oil change costs for it put the two even for my usage, but the charging time on longer trips was significantly longer than overall fueling time of the PHEV). But it’s about one or two generations of EV from losing. As it stands, I could already do my driving with a long range EV and just factor in more travel time (and, of course, a bit of time to find a working charging station). By the next time I buy a car, I suspect there will be efficiency, charging speed, and range gains that make an EV the best choice.

MasterMario
MasterMario
1 month ago

Toyota is partially right. The government should be subsidizing the end goal, not the means. They should be giving $7500 credits to every zero emissions vehicle, not just EVs. Also, I wish they had made an interim step first. Mandate all vehicles be plug-in-hybrids (or other zero emissions tech) by 2030 with a minimum 30 mile zero emissions range instead of pushing for 100% full electric right away.

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