New Law Bans Chinese EV Batteries – Here’s Who Wins 

Daily Profit Investing Research
by 

The Inflation Reduction Act is sparking…

A mad rush to secure critical metals to make electric vehicle (EV) batteries.

That’s why Tesla (NASDAQ: TSLA), Ford (NYSE: F) and General Motors (NYSE: GM) are quickly inking billion-dollar supply agreements.

Tesla paved the way by building battery Gigafactories in Nevada and Texas. And now the company is preparing to refine lithium at a new plant on the Texas Gulf Coast.

Why is Tesla getting into the lithium business? It’s thanks to the recently passed Inflation Reduction Act.

The new law lets you claim up to a $7,500 tax credit on the purchase of an EV. This tax credit is based upon any EV meeting three “made in America” requirements:

  1. Final vehicle assembly must be completed in the U.S.
  2. Critical battery minerals: 40% of the metals inside the batter must be recycled, extracted or processed in the U.S. or a country with a free trade agreement.
  3. Battery components: 50% of the EV battery components must be manufactured or assembled in the U.S. or a country with a free trade agreement.

Those percentages increase annually after 2023.

Currently, China provides more than 80% of the lithium that’s used in EV batteries. However, cars using lithium from China will be ineligible for tax credits starting in 2024. 

This creates an effective ban on battery metals from China. And it’s forcing automakers to find alternatives.

Indeed, every automaker selling EVs in America wants their cars eligible for the tax credit. That means they MUST begin sourcing metals and batteries from within the U.S. – or from a select group of countries.

Currently only 20 countries have a free trade agreement with the U.S.

Australia is one of them. And it’s quickly becoming one of America’s most important EV battery partners.

Additionally, Australia already mines 50% of the world’s lithium. Today, that lithium is shipped to China for refining. And the finished product is then shipped to battery factories around the world.

The Australian government is making a big push to jumpstart their lithium refining business. Doing so would allow Australian lithium to be mined and refined in the country. And then shipped directly to battery Gigafactories around the world.

Furthermore, this will cut China out of the lithium business. It’ll be a boom for the country’s mining companies. And it’ll help America secure a direct source of lithium from a friendly partner.

Bloomberg reports that the country plans to grab a 10% share of lithium refining by 2024. And that number could jump to 20% by 2027.

Yours in Wealth,
Ian Wyatt

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