The move comes after Panasonic announced in October that it would build a new battery factory in De Soto, Kansas. Construction started in November, and the company plans to reach mass production by March 2025.
The slew of recent investment deals in the US by Asian battery powerhouses takes place while the country seeks to establish a local battery value chain and reduce its dependence on external countries.
The latest agreement aligns with Panasonic’s strategy to expand production and supply of lithium-ion EV batteries beyond Japan, targeting North America while implementing economies of scale.
The batteries supplied to Lucid Group will be sourced from the new factory and from the Japan-based facility.
The Japanese conglomerate is already a long-time supplier of lithium-ion batteries to EV carmaker Tesla through its manufacturing facility in Nevada. The Kansas factory will be Panasonic’s second EV battery factory in the United States.
The US government has adopted policies aimed at driving battery demand domestically and securing the establishment of a resilient domestic-battery value chain to support the transition to EVs.
The US Inflation Reduction Act (IRA), which was introduced in August, offers a tax credit for the purchase of EVs in which at least 80% of the lithium, cobalt, nickel and manganese used in their construction has been extracted and processed in the US, or in a country with which it has a free trade agreement.
“The IRA has resulted in an influx of development plans across the battery raw material value chain, with announcements coming almost weekly,” Fastmarkets battery raw materials analyst Jordan Roberts said. “The attractive incentives on offer are encouraging companies to build out the US supply chain, often at the detriment of planned developments in Europe. Companies have now announced close to 1,000 GWh of capacity by 2030. Exceeding the domestic demand requirement from EVs, which Fastmarkets forecasts at 468 GWh in the same year.”
“We expect demand for battery raw materials in the US, such as lithium, to increase tenfold between now and 2030,” he added.
Other automakers and battery producers have recently announced plans to step up EV and battery manufacturing, as well as EV battery recycling, amid the push to meet net-zero carbon emissions targets by 2050.
South Korean chemical firm LG Chem signed in November a memorandum of understanding with the US state of Tennessee for the establishment of a new cathode manufacturing facility in the city of Clarksville.
Stellantis NV and Samsung SDI have signed binding, definitive agreements to invest at least $2.5 billion in a joint venture manufacturing facility for EV battery cells and modules in Kokomo, Indiana, the companies announced in May.
While there are numerous start-ups that seek to enter the market as demand continues to grow, at present, five companies produce almost all EV battery cells in the US: AESC, LG Chemical, Panasonic, Samsung, and SK.
Securing the raw materials needed for the energy transition, establishing a more localized lithium-ion battery value chain and reducing over-reliance on external countries are on the agenda of major western economies.
On December 12, the US and other western countries, including Canada, announced the establishment of the Sustainable Critical Minerals Alliance during the COP15 talks on biodiversity held in Montreal, Canada.
The alliance set the standards for the production and procurement of minerals critical to the energy transition, such as lithium, cobalt and nickel, from countries with stronger environmental and labor standards.
The move could further affect trading activities with China, at present the dominant supplier and refiner of most of such minerals.
Lithium is a key ingredient in batteries that power EVs. and demand for the material is expected to increase in the near and medium term.
Benchmark seaborne East Asian lithium spot prices have held steady in recent weeks amid the limited spot trading typically experienced toward the end of the year, shrugging off the weakness seen in the more liquid Chinese spot market.
Fastmarkets’ daily price assessment for lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price, cif China, Japan & Korea was $84-86 per kg on Friday December 16, unchanged since November 22. The price started the year at $34-36 per kg.
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