How the USA can build a lithium ion and electric vehicle economy: Benchmark Summit 2020, Washington DC

ON TUESDAY 20 OCTOBER 2020, BENCHMARK MINERAL INTELLIGENCE HOSTED ITS BENCHMARK SUMMIT 2020 – WASHINGTON DC, THE ANNUAL MEETING PLACE CONNECTING GOVERNMENT AND INDUSTRY. 
THE BENCHMARK SUMMIT OPENED WITH SPEECHES FROM SENATOR LISA MURKOWSKI (R-ALASKA), CHAIRMAN OF US SENATE ENERGY AND NATURAL RESOURCES COMMITTEE, AND SENATOR JOE MANCHIN (D-WEST VIRGINIA), RANKING MEMBER OF THE SAME COMMITTEE, AND SIMON MOORES, MD OF BENCHMARK. 
VIVAS KUMAR, PRINCIPAL, BENCHMARK, GAVE THE FOLLOWING SPEECH OUTLINING A PATH FORWARD FOR THE US GOVERNMENT IN BUILDING A DOMESTIC LITHIUM ION ECONOMY. 

Thank you Simon, Senator Murkowski and Senator Manchin for your leadership on this important strategic topic at the highest level of US Government. Seeing your strong bipartisan support towards our country’s technology and industrial leadership makes me proud to be American.

The lithium-ion battery will go down in history as one of the most important platform technologies of our current century. Platform technologies are not like others. They are the technologies:

  1. that result from decades of innovation
  2. that build entire industries
  3. that secure a country’s long-term geopolitical advantage
  4. that further our national security
  5. that create large economic value multipliers and jobs

Since the first Industrial Revolution, the USA has built a dominant advantage from a sustained long-term commitment to platform investments. A few examples of the platforms where the USA has historically led are: 

  • Communications infrastructure, such as telephones, connectivity, satellites, and the Internet
  • Computing, in sectors such as semiconductors and software
  • Electrification, in storage, generation, transmission 

And finally, the one platform technology sector that is being transformed by incorporating all of the elements of the 3 we just mentioned: automotive.

Every passing year brings an entire lifetime of changes to the automotive industry. The primary trend underlying all others is a rapid trend towards electrification away from fossil fuels and internal combustion.

This fundamental shift is not just economically advantageous, but a stark necessity in a world complicated by the effects of climate change. 

I am pleased that my former employer Tesla has become the world leader in the electric vehicle race.

But as we have discussed, the USA is widely exposed in its dependence on foreign parties and companies for the essential elements needed to build the lithium-ion batteries that power these vehicles. To solve that challenge, I propose a framework for an advanced American supply chain industrial strategy with 3 core elements:

  1. Policy
  2. Legislation
  3. Funding

All 3 are interconnected. All 3 are necessary. All 3 result in an important capitalistic outcome: incentivising the private sector to innovate, commercialise, and lead.

On US Policy:

On policy, President Trump’s declaration of a National Emergency on Rare Earths is a positive step forward.

In a time of continued trade tensions with China, an increased focus on the fragility of industrial supply chains, and heightened security requirements, this emphasis on developing a domestic source for an irreplaceable element of our technology systems is well received. We need the same kind of definitive national level action on the elements of powering our energy future: lithium, nickel, cobalt. 

On legislation, the US Mineral Security Act that originated from the Senate Energy and Natural Resources Committee is a crucial first step. We need more. 

We could ask, what more could be done at the level of individual states or counties? Arkansas, North Carolina, California, and Nevada are examples of states with economic reserves of lithium which could be used to feed into the domestic battery supply chain.

Beyond lithium, what more can be done to develop a supply chain hub around core manufacturing assets such as the Tesla Gigafactories in Nevada and Texas, or the General Motors Lordstown plant in Ohio?

Could the National Act lead to individual state-sponsored directives around shortened permitting pathways?

Could it lead to increased state-level subsidies for infrastructure development to spur mining development? I am sure through the conversations we have today with this diverse audience, we can generate some interesting ideas.

On funding, we can look to allies in Europe for a great example of words and action being translated into government-led financing initiatives. 

Benchmark Minerals Team briefs The White House & The Pentagon; (Left-Right: Vivas Kumar, Principal Consultant; Simon Moores, Managing Director; Ty Dinwoodie, Advisor)

Identifying strategic assets, lessons from semiconductors

In August 2020, the German Government offered a $525M state guarantee for the construction of Swedish company Northvolt’s factories.

These are strategic assets in maintaining the long-term employment prospects and economic value of the German auto industry. The industry hopes that more Western governments follows suit.

Capital markets by themselves are not enough to solve the challenge of securing the upstream supply chains. The same level of government action on subsidising downstream electric vehicle growth is sorely needed in the upstream.

The USA has applied this type of 3-pronged approach in other platform technology industries as well.

Let’s take semiconductors.

The USA has >50% of the world’s semiconductor market share. Around 44% of American companies’ wafer fabrication capacity is within US borders.

Many of the largest buyers of semiconductors in the world are in the USA.

The USA has won this game for many decades, and other industrialised economies are envious of our lead. None more so than China for whom semiconductors represent the largest segment of yearly negative trade balance.

To bolster the next half-century of American dominance in semiconductors, Congress passed the CHIPS Act in June 2020 with overwhelming bipartisan support. This act incorporates all 3 prongs of our strategy:

  1. It began as a policy discussion related to national security and defense interests
  2. It morphed into bipartisan legislation
  3. It included >$20B in funding opportunities from the US Treasury to fund the development and adoption of secure microelectronics supply chains

We need to adopt this same vigilance on the question of lithium-ion batteries so that in the future, we are not the ones looking at other countries with envy as they overtake us in today’s industrial revolution.

So that we are not the ones playing futile catch-up. Or worse, so that we are not the ones losing high-skilled high-paying industrial supply chain jobs to other countries who had greater foresight in this critical moment.

The lithium-ion battery will go down in history as one of the most important platform technologies of our current century. There is no time like now for our nation to invest in its full supply chain – from mining to chemicals to batteries to vehicles to the grid to recycling. 

We at Benchmark, and I as a proud American, are pleased to play our role in developing this industry to create new energy jobs, clean our air, bolster our national security, and strengthen American technology leadership.

Thank you.

End.


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