There has been much concern about battery materials and global geopolitical risks. In some ways it would be easy to just keep relying on China for rare earths, lithium and other things we need for the energy transition. But, as we’ve learned in the past, depending on someone too much gives them leverage that they can use against you.
The bean counters who think in terms of quarterly profits will disagree and say we are misallocating wealth, but the risks have proven themselves in the past. In 2010, China’s decision to withhold supplies to Japan resulted in Japan’s vulnerability to compromise over a border dispute. This event could have been a driving force behind Japan’s decision to take a distinct approach to clean technology, possibly explaining its continued emphasis on hydrogen technology for cars. In contrast, most other countries are currently prioritizing the development of battery electric vehicles.
So in the future, if we don’t want the rug pulled out from under us and the clean technology revolution stopped, we’d better find a better rug to stand on.
Fortunately, American and European leaders have become wiser. A good example is the Inflation Reduction Act of 2022. In a section limiting which vehicles are eligible for tax credits, it says:
“EXCLUDED ENTITIES.—For the purposes of 2 this paragraph, the term “new clean vehicle” does not include–
‘(A) any vehicle placed in service after December 31, 2024 for which any of the applicable critical minerals contained in that vehicle’s battery (as described in subsection (e)(1)(A)) has been extracted, processed or recycled by a foreign entity of interest (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act (42 USC 18741(a)(5))), or
”(B) any vehicle put into service after December 31, 2023, for which any of the components in the battery of such vehicle (as described in subsection (e)(2)(A)) has been manufactured or assembled by a foreign entity of interest (as defined).”
Foreign entities of concern refer to countries that are not trusted by the US government and may pose a potential threat to US interests. This phrase is used to describe nations that could be considered unreliable or dangerous in the eyes of the US. It is not unusual for the US to impose sanctions or other measures on these countries to protect their national security and interests. In this case, they put battery materials from China on an unequal footing to give minerals from the US and allies a better chance.
Much of the news about the response to this has come from the United States itself and Canada, but it’s important to note that the ripple effect extends to Europe. They face a similar problem and need more domestic lithium production, and not just for automakers to sell in the United States.
And, an announcement from Mercedes-Benz a few days ago shows that the company is taking this seriously. Today, Rock Tech Lithium Inc., a German-Canadian startup, held a groundbreaking ceremony for its lithium plant in Guben, Brandenburg. This event marks an important milestone for Mercedes-Benz and will enable greater vertical integration and localization of its powertrain technologies as part of its electrification goals in Europe. Thanks to the collaboration with Rock Tech, Mercedes-Benz can supply its battery partners with high-quality lithium hydroxide, which will help scale production of fully electric vehicles.
“For Mercedes-Benz, the shift to electric mobility also means a change in our supply chains. Three goals are central to us: sustainability, raw material security and localization of purchasing,” said Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG. Chief Technology Officer, Development and Purchasing. “Today’s groundbreaking job in Guben is therefore another milestone for Mercedes-Benz on its way to the sustainable production of state-of-the-art batteries. When it comes to our lithium supply here in Europe, Rock Tech will play a key role for Mercedes-Benz in the future.”
The strategic partnership between Mercedes-Benz and Rock Tech was unveiled at the August 2022 German-Canadian Summit in Toronto. The cooperation followed the signing of a Memorandum of Understanding between Mercedes-Benz AG and Canada. This MOU paved the way for deeper collaboration between the two companies in all aspects of the automotive value chain, with a particular focus on natural resource development.
Under the supply agreement between Mercedes-Benz and Rock Tech, the two companies will work together to create a plan to achieve net carbon neutral production of lithium hydroxide by 2030. In addition, the lithium hydroxide supplied by Rock Tech must come from mining sites. that have been audited by the Initiative for Responsible Mining Assurance (“IRMA”).
Part of a larger effort
Mercedes-Benz pointed out in the announcement that it has been doing other things to bolster the lithium industry in Europe. The company has actively pursued several initiatives to ramp up electric vehicle production capacity. The company will use its battery factories in Untertuerkheim (Hedelfingen & Bruehl), Kamenz and Jawor (Poland), as well as the announced sites in Sindelfingen and Koelleda, to support its EV plans. ACC will supply the batteries, which will be produced in three European factories: Douvrain, Kaiserslautern and Termoli. In addition, the eCampus center for research and development competence, which is being developed at the heart of the Untertuerkheim plant, will focus on the development of new battery and battery cell generations.
Mercedes-Benz is also working to increase its renewable energy generation capabilities. The company aims to cover more than 70% of its power generation needs with renewable energy sources by 2030. It has started building its own battery recycling plant in Kuppenheim, Germany, and is developing a high-power charging network in Europe.
Finally, Mercedes-Benz has taken steps towards sustainable, closed-loop recycling of battery materials to reduce resource consumption. These initiatives are in line with the company’s sustainability strategy, Ambition 2039, which prioritizes enabling EV charging with green energy.
This latest announcement, coupled with these other efforts, shows us that the company is quite serious about not just selling EVs, but ensuring that the materials come from more ethical and geopolitically safe sources. Combined with these kinds of announcements we’ve heard from other companies, it’s clear the industry is trying to do the right thing.
Featured image provided by Mercedes-Benz.
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