The Biden administration announced a new $3.16 billion package that aims to address the nation's battery shortage. The White House and the Department of Energy said Monday that the funds would be used to invest in local battery manufacturers to allow them to increase their production capacity to meet the country's growing energy needs.
Part of the funds, which will be taken out from the recently passed bipartisan Infrastructure Law, will also be used towards addressing issues in the industry, such as component shortages and mitigating the environmental impact involved in the manufacturing of battery cells.
White House National Climate Adviser Gina McCarthy said the U.S. would need a lot of batteries, and the country would need to source them locally. He added that the package should also help generate more jobs at home.
The newly announced package is part of a larger campaign to boost American independence when it comes to obtaining valuable materials, which are used to power much of contemporary life but are sourced mainly from other countries such as Russia, Ukraine, and China.
The White House said the funds would be distributed as grants to companies wanting to develop operations in the United States to turn raw battery components into completed cells that can be used for applications such as electric vehicles. The funds will require a match from the receiving firm, and the minimum award will be $50 million. That implies that each of the grants that will be given will cost at least $100 million.
The Department of Energy said that other grants would be given to companies involved in the recycling of used batteries. The agency's Office of Manufacturing and Energy Supply Chains said it would be focusing on advancing the technology used to reclaim materials from used batteries, which can then be used to manufacture new cells.
Some of the minerals used in batteries are lithium, nickel, cobalt, graphite, and manganese. Tesla recently reported problems in acquiring enough nickel to produce its batteries, while Rivian has cautioned about supply chain issues.
The White House said EV battery development is a national interest and has invoked the Defense Production Act. The president's use of the Act, which permits him to compel firms to do activities deemed important for national security, allows the White House to compel the development of domestic manufacturing capabilities in certain critical commodities.
Russia contributes nearly 20% of the world's nickel, and both Russia and Ukraine are key players in global precious metal supply chains. Lithium production is dominated by China. Biden previously said that it was important for the country to end its long-term reliance on China and other nations for materials that will power America's future.
