Greg Ballard: Future auto manufacturing depends on China supply chain

Whether one chooses to see it or not, the electrification of global transportation is underway. The tipping point has been reached—and this transformation will affect Indiana perhaps more than any other state.

Indiana has the greatest concentration of manufacturing jobs in the country. And as a top three auto manufacturing state, Indiana remains dependent on the industries powering this change.

The electrified future is already evident in Indiana. Union City is home to electric-truck manufacturer Workhorse. Indianapolis-based EnerDel builds lithium-ion batteries and electric systems for heavy-duty vehicles. Cummins Inc. manufactures hybrid and fully electric powertrains along with lithium-ion battery packs.

While the U.S. has held on to its fossil-fuel dependency, China has over the past two decades purposely been cornering the supply chain that is vital to the future of transportation. China holds a commanding influence over materials that American electric vehicle and battery manufacturers need. The energy not-for-profit Securing America’s Future Energy clearly said in its recent report, “Commanding Heights of Global Transportation,” that the United States lags far behind China’s EV manufacturing and battery supply chain.

For instance, China controls nearly 70% of global EV battery manufacturing capacity, while North America has less than 10%. Backed by its government, two Chinese companies alone, CATL and BYD, account for one-third of the battery market.

Also, crucial to these industries are elements known as rare-earth minerals—materials also vital for next-generation U.S. defense systems. China exerts near-total control over the rare earths’ supply chain and has leveraged this dominance in moments of diplomatic tension. It halted supplies of specific minerals to Japan after the 2010 detention of a Chinese trawler captain and weighed doing so to the United States during the trade dispute.

China also holds significant influence over about 70% of the world’s lithium supply, and in the Democratic Republic of Congo, which controls more than two-thirds of global cobalt production, eight of the 14 largest mines are Chinese-owned.

In contrast, the U.S. is completely reliant on imports of cobalt and graphite and is mostly reliant on imports of lithium and nickel. As currently planned, 107 of the 142 lithium-ion battery mega-factories worldwide are or will be in China. Just nine are planned for the United States.

We cannot allow China to hold such leverage over us for decades to come. America must build a robust supply chain free from the control of our biggest strategic rival. Otherwise, Indiana’s automotive manufacturing future will be dependent upon decisions made in Beijing.

This should be setting off alarm bells for U.S. policymakers and for Indiana manufacturers. America needs a minerals-to-markets solution. Developing our own critical minerals supply chain along with our allies would diversify dependence away from China. This includes both harvesting raw materials and processing them into usable compounds for batteries and other technologies.

The transition to electric transportation is inevitable. America and Indiana must be competitive all along the supply chain to secure the jobs that will come with this transition. A thriving end-user market is vital to these efforts, so we must also consider reforming EV and battery credits along the electric transportation chain. States should be looking at additional measures.

Indiana’s manufacturing base relies upon its ingenuity and innovation to succeed. However, given that it is competing against both Chinese companies and the Chinese government, we need U.S. policies and actions that bolster American companies’ ability to compete.•

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Ballard is a former Indianapolis mayor and author of “Less Oil or More Caskets: The National Security Argument for Moving Away from Oil.”