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Biden's tariffs don't loosen China's grip on one key mineral in the EV economy

Catherine Boudreau   

Biden's tariffs don't loosen China's grip on one key mineral in the EV economy
  • Biden raised tariffs on China's green tech, but spared graphite for two years.
  • China dominates global graphite supply, which is vital for EV batteries.

President Joe Biden this week hiked tariffs on China's massive green-tech sector, which includes electric vehicles, batteries, solar cells, and certain critical minerals, touting them as a way to protect American workers.

But Gene Berdichevsky saw a gaping hole. The White House decided to delay by two years tariffs on graphite, a key metal in EV lithium-ion batteries that helps them store energy. China mines and processes the vast majority of the world's supply, according to federal US data.

"If our policy is that China is not playing on a level playing field, so we're going to use tools to level them, then we should do it in a way that actually has the outcome we want — which is to develop domestic battery supply chains," Berdichevsky said Tuesday during dinner with reporters in Washington, DC.

Berdichevsky is the CEO of Sila, a next-generation battery materials startup that uses silicon instead of graphite. The company's technology makes lithium-ion batteries lighter than what's on the market today, and the firm says it helps store 20% more energy, or up to 100 extra miles for some EVs. Berdichevsky, an early employee at Tesla, said he saw a future where EVs could recharge in 10 minutes, which would rival a stop at the gas station.

Sila opened a factory last year in Moses Lake, Washington, with help from a $100 million grant from the US Department of Energy. The company aims to make enough battery materials to power 200,000 EVs by 2026, and Mercedes-Benz is already a customer.

Manufacturing a new technology in the US is challenging for a number of reasons. In Sila's case, it needs to scale big enough to meet the demand of large automakers, Berdichevsky said. That requires billions of dollars, but it's hard to raise funds between the venture-capital and private-equity stages — a gap he described as the "missing middle." In addition, the US is slow to transform its infrastructure, including power grids and EV charging, which would drive demand for homegrown green tech. Meanwhile, there's the risk that another company copies the technology and tries to compete.

Now, the White House is sending a disappointing signal to Sila's investors by exempting Chinese graphite from tariffs and other policies designed to shift automakers away from sourcing batteries and critical minerals from China, Berdichevsky said.

He added that if the White House slapped tariffs on graphite, "the market would react and go, 'Oh, there's this new technology that can replace graphite that's made in the US — let me go and invest in that.'"

New trade barriers would make EVs sold in the US more expensive, Berdichevsky added. But it would send a strong signal "to get the hell out of Chinese graphite right now, not two years from now or longer."

The White House didn't return a request for comment. But a senior Biden administration official said during a call with reporters that some tariffs would kick in in 2026 to allow battery supply chains to transition. Domestic production is beginning to come online but not quickly enough to minimize market disruption.

An analysis by the Environmental Defense Fund found that enough US battery production had been announced to supply all the EVs expected to be sold in 2030. However, those batteries can still source graphite from China until at least 2027 under the Biden administration's policy.

Beyond graphite, other tariffs that Biden slapped on China's green tech are mostly symbolic. Existing tariffs already keep Chinese EVs out of the US market, while cheap solar panels are mainly arriving from Southeast Asia to circumvent trade barriers. But steeper taxes on batteries this year could affect US automakers such as Ford and Tesla, which import from China.

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