US in $3.5bn battery supply chain funding drive

Second tranche of funding focuses on processing

US in $3.5bn battery supply chain funding drive
The US government wants to develop a domestic battery supply chain

The U.S. Department of Energy (DOE) has announced up to $3.5bn in funding to boost the domestic production of advanced batteries and battery materials.

The funding will create new, retrofitted, and expanded domestic facilities for battery-grade processed critical minerals, battery precursor materials, battery components and cell and pack manufacturing.

“Positioning the United States front and centre to meet the growing demand for advanced batteries is how we boost our global competitiveness, maintain and create good-paying jobs, and strengthen our clean energy economy,” says US energy secretary Jennifer Granholm.

The US depends on foreign sources for many of the processed versions of critical minerals needed to produce EV batteries, and wants to establish a domestic value chain. This funding comes as part of a second phase of investment enabled by the Bipartisan Infrastructure Law.

The first phase of the funding scheme focused on mineral extraction, aiming to support development battery-grade lithium, graphite and nickel to supply approximately 2mn, 1.2mn and 400,000 EVs respectively.

The DOE awarded $2.8bn funding to 20 companies to build and expand commercial-scale facilities  in 12 states to extract and process the materials.

In the second phase the DOE will focus on mineral processing and battery component manufacturing. It is calling for projects to apply in a number of areas including: cathode and anode material production, facilities for the separation of battery-grade critical materials, component manufacturing facilities and precursor production facilities in specialised non-light duty markets.

The areas of focus for future iterations of the funding scheme will be updated every six months as the value chain evolves.

The funding will be administered by the DOE’s Office of Manufacturing and Energy Supply Chains (MESC). Project applications are due by 19 March next year.

The US Inflation Reduction Act also earmarked around $70bn for the US battery supply chain, largely delivered in the form of tax credits.

The tax credits grant $35/kWh for domestically produced battery cells, $10/kWh for domestically produced battery modules and a 10pc production cost credit for mining critical minerals and producing electrode active materials.

On the demand side, the US government and some states also offers clean vehicle tax credits for consumers as well as commercial fleet operators.

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