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The Electric Quarterly: In 2022, the U.S. Raced Into the Battery Game, but Dark Clouds Loom Ahead

The Electric Quarterly: In 2022, the U.S. Raced Into the Battery Game, but Dark Clouds Loom Ahead

Happy New Year and welcome back to The Electric!

Last year was one of the most eventful in the new age of electrification. This week, we look back over 2022 in the world of batteries and electric vehicles, and then focus in on one event that towered over the others in terms of potential consequences: the passage of the U.S. Inflation Reduction Act.

At the start of 2022, China was the clear global leader in producing electric vehicles and batteries and processing the minerals that make them work. The U.S., by contrast, had plans for few battery factories and virtually no factories to process the necessary raw materials. 

A year later, the rest of the world is scrambling to respond to an unexpected and resolute $250 billion U.S. plan to create a domestic battery industry over the next decade and lock out Chinese suppliers. In the four months since President Joe Biden signed the Inflation Reduction Act into law, major Western auto and battery companies have announced $28 billion of investments in U.S. battery and raw materials processing plants, according to BloombergNEF, a renewable energy research firm. China remains dominant, but from nowhere, the U.S. seems poised to become a battery “superpower” as well, BNEF analyst Yayoi Sekine told me.  

The ambition of the IRA and the earlier infrastructure law make them the most important energy story of 2022—and, according to numerous analysts, of this year, too. After decades of watching China conquer one industry after another, the U.S. has shed its ideological wariness of government intrusion in business and made itself the central actor in the establishment of a new industry. Looking ahead, the money behind the laws, and U.S. decisions about who qualifies for the generous subsidies and who doesn’t, could steer global EV and battery investment for years to come.

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