Electric Vehicle Battery Production May Lead To Coal Country’s Return

The electric battery maker SPARAR
KZ announced the location of a factory it will build in West Virginia — the byproduct of the Inflation Reduction Act. The plant will produce storage devices with no cobalt, a raw material mined in the Democratic Republic of Congo and processed in China.

The move is a harbinger of what is to come — the domestic mining of essential raw elements and building batteries in the United States. The 482,000-square-foot factory in Bridgeport, W.V. will initially employ 350 people. The California-based battery producer said it has an agreement with the United Mine Workers to hire and train idled workers, marking what could become coal country’s turnaround.

To start, the factory will build batteries that go into forklifts and farm equipment and those used for energy storage that harnesses electrons and releases them later. But over time, the plant will gear up for an expected boom in the electric vehicle market. EVs now make up about 2% of cars worldwide. But the Bank of AmericaBAC
says it could be as high as 25% in 2025 and 50% in 2030 in the U.S.

“SPARKZ is excited to bring its patriotic power company to West Virginia and begin hiring coalfield families starting today. This is the perfect location to begin re-engineering the battery supply chain to end China’s dominance in energy storage,” says Chief Executive Sanjiv Malhotra, on August 30. “These folks are highly trained when it comes to safety. Safety is paramount in the mining sector, and safety is very important as we are looking at manufacturing batteries.”

The Inflation Reduction Act gives electric vehicle buyers a $7,500 tax credit beginning immediately for some cars and 2023 for others. But there are catches: first, much of the materials that make up EV batteries — cobalt, lithium, graphite, nickel, and manganese — must be mined in the United States or purchased from countries with free-trade agreements with this country. Those elements must start at 40% and increase by 10% annually to 80% by 2026.

And second, the EV batteries must be manufactured or assembled in North America where such a free-trade pact exists. Specifically, half of the assembly must occur in 2023 and hit 100% by 2028.

Trouble Ahead?

For its part, the Bank of America’s Global Research Department fears that battery production won’t keep pace with the growth of the EV market — something that could spell trouble by 2026. But the dynamic could force the industry to use less cobalt and rely on lithium iron phosphate instead. Still, the bank says that it will be a challenge to hit the thresholds required by the Inflation Reduction Act. A Utility Dive story quoted the institution as saying that U.S. lithium production may be the lowest hurdle.

Historically, lithium-ion technology uses cobalt — an element that is difficult to mine that can lead to “thermal runaways” or fires. But the technology has greater density and allows more energy to be stored. It’s used for electric vehicles, grid balancing, and cell phones. However, there are other battery technologies.

One is “solid-state” batteries that avoid lithium and use oxides, sulfides, phosphates, and solid polymers. They do not use combustible materials and have long lives — up to 400,000 miles for an electric vehicle. But they are more expensive than lithium-ion batteries. TeslaTSLA
has its eye on this technology, and Toyota wants to bring it to the fore in 2025.

“We should focus on finding non-lithium alternatives to address battery storage,” says Eric Dresselhuys, chief executive ESS Inc., in response to this reporter’s questions. Because of their reasonable cost, safety features, and low toxicity, iron lithium batteries are finding markets as a backup power source for utilities and Chinese car markets. They do not use nickel that could come out of Russia — or Indonesia, and the Philippines, which are much friendlier to the United States.

Dresselhuys says that the United States will never be able to out-mine China and other emerging nations that lack rigorous environmental regulations. Therefore, this country should focus on building better and cheaper battery technologies — not on developing raw materials.

The United States relies on China for cheap labor. Rare earths contain 17 minerals. Separating them is a dirty and labor-intensive effort. China mines 63% of all such minerals. But it controls 85% of the processing — the step to separate the 17 minerals from the rare earth rock. The United States still produces 38,000 tons, but China processes it.

Turning Red States Green

The Biden administration wants half of all cars sold in the United States to run on electricity by 2030. Carmakers are getting ready. For example, Tesla expects to sell 20 million electric vehicles by 2030. It has a lithium-ion battery factory in Nevada and China. It is building one in Germany and Austin, Texas where it will produce batteries, battery packs, and powertrains.

The company also says it can recover 92% of a battery’s materials. Fossil fuels are extracted and used once; it notes that the lithium-ion battery materials are recyclable. Once the raw materials are in the lithium-ion cells, it says that they will remain there until the end of the car’s life. Tesla says recycling is much less expensive than purchasing raw materials to build new batteries.

Further, Mercedes-Benz is working with Envision AESCSC
to produce electric batteries by 2025. The Mercedes-Benz plant in Tuscaloosa, Alabama, has been the production plant for large sport utility vehicles since 1997. The same plant will now be producing all-electric vehicles. The automaker says it will invest at least $46 billion by 2030 to develop EVs.

“The opening of our new battery plant in Alabama is a major milestone on our way to going all-electric,” says Ola Källenius, chairman of the board of management of Mercedes-Benz Group AG. “With our comprehensive approach including a local cell sourcing and recycling strategy, we underline the importance of the U.S., where Mercedes-Benz has been successful for decades.”

The United States wants to be a world leader in battery production and EV development. The bipartisan infrastructure law has already allocated $3.16 billion to boost American battery manufacturing, recycling, and domestic supply chains. The Inflation Reduction Act builds on that effort.

Senator Joe Manchin, D-WV, had been one of the holdouts. But the broader bill has many benefits for his constituents. Beyond being the catalyst for at least two businesses coming to the state, West Virginia may also host a regional hydrogen hub that could win billions of dollars in investment. SPARKZ is just the tip of the iceberg — the potential influx of businesses and jobs.

“Engaging our strong and capable workforce here in West Virginia to manufacture batteries domestically is critical to our energy independence and stability,” Manchin says. ”The Sparkz facility will create 350 good-paying, long-term jobs, and I look forward to seeing this initiative grow. We will continue to work closely together to bring battery manufacturing here to the United States so we don’t have to rely on foreign supply chains for our energy needs.”

Ironically, West Virginia voted overwhelmingly for Donald Trump — a guy who vowed to bring back the coal industry. But market forces prevailed, and those companies struggled even more under his watch. In contrast, President Biden pledged to reinvent hard-hit regions by encouraging modern economic development. The infrastructure law and the inflation reduction act are doing just that, and coal country illustrates it.