The latest discovery by the European Commission is that China could be dumping precux electric cars and that investigators could impose a tariff on imports at levels similar to the 27.5% already imposed by the US. Be careful, the investigation could be delayed up to 9 months, which taking into account that Chinese automobile exports increase at 58% annually and that production in 2022 grew by 210%, could mean that the decision on the tariff is made with an as imports of Chinese cars to Europe double the current levels before any type of measure. And if they put the tariff on it, will European electric vehicles be competitive? Well clearly not, because we have known for a long time that all the materials for the electric car are Chinese and that those that are not, such as cobalt, are materials over which China has long-term purchasing rights. . . Not to mention the unionization of workers in Europe against the Chinese factories and also the American ones of Tesla, for example.
Now it is used as an argument that the Chinese subsidized solar panels and that in Europe there was a competitive solar panel industry. This was simply in the beginning and clearly Europe, and specifically Spain, was the one that ‘subsidized’ the Chinese by establishing guaranteed high returns for investors. But the European industry could not cope with the production of a large number of plates because the polysilicon factories, apart from being almost non-existent, could not be created due to environmental regulations and the existing ones were not competitive compared to the Chinese ones, which had raw materials and cheap energy to make the plates.
Today The World Imports a Large Part of the Solar Panels from China Because the Country is Going to Install ONE AND ONE Polysilicon Plant, Because It is Very Expensive, Intense!!! Environmentally it is a disaster and requires a workforce that works in very harsh and demanding conditions. .. and if you want to add something else, add it. The fact is that the lesson should have been learned: a government cannot implement a sustainable mobility or renewable energy policy without putting the costs in strategic autonomy and employment on the table. If you do not have the necessary materials or the social support for the production of the materials necessary for the electric car – think about the rejection of lithium mining – you have to be more prudent and rational.
Let’s just think about the batteries, to understand that they have not thought in advance about the problem they created and that they now intend to correct with a patch called a tariff. It is true that battery prices have dropped a lot in recent years, but this is mainly due to the larger size of factories and more efficient production methods, something that is normal when scaling a process. But the natural consequence is that the cost share of raw materials has increased steadily.
In this way, the cost of materials is already 90% of the total value of a battery. In other words, setting up battery factories in Europe will only leave 10% added value, the rest will be value for the Chinese. Furthermore, European factories in many cases, almost all, also carry process patents that are Chinese, so the value that will remain in Europe will be minimal.
But if this was already known to anyone with a moderate level of expertise, why wasn’t a process first launched to see if it could be done in Europe, and if not, do something much more controlled with regard to the electric vehicle. The problem has only just begun
If the war in Ukraine revealed that Germany depended for its entire industry on Russian natural gas, and created a crisis in which we are still immersed with the Germans in recession, let’s imagine the potential problem with Chinese batteries that, furthermore, are not easily replaceable, such as Russian natural gas could be with liquefied natural gas.
The concentration of risk is brutal. 60% of all batteries are made in China, but of all the batteries in the world, including Korean and Japanese ones, in the value of the production chain, 80% of all cathodes are Chinese and practically 90 . % of the years. Finally, its final value share is 75%. This is because all the raw materials are refined in China: in a normal lithium ion battery the most abundant material is graphite, which weighs about 50 kilos. Well, 85% is processed in China; the same for cobalt (12 kilos) where 75% of the world is processed; manganese, 11 kilos and 95% of the world total processed there. Furthermore, since it does not produce lithium and cobalt, China has already contracted much of what is necessary to triple production. How have you done it? Well, giving loans to emerging countries and producers of raw materials. China is the world’s largest official lender, more than all the agencies on the United Nations boards.
In short, the Chinese have made head of it and for now China’s Electricity and Grid Energy Storage, Clearly Expect Strong International Expansion. The production capacity of Chinese battery factories is expected to reach 1,500 gigawatt hours this year, enough for 22 million electric vehicles, more than double projected demand.
I do not believe that Borrell’s visit to China represents a solution to the problem, or even a good patch. We think that in China there is a price war due to the excess production of vehicles, and that they are going to place them no matter what. Of course, exports of electric vehicles in Europe will be between the different European countries, which will have Chinese battery factories. Finally, with the Next Generation funds, something historic has been achieved in 2022: 50% of Chinese investment in Europe is made in the automotive sector. In 2022, the number of available electric vehicle options reached 500 models, up from less than 450 in 2021 and more than doubling from 2018-2019. China has the largest portfolio with nearly 300 models available.
