Automotive industry

The US OEM Auto Industry’s Big Problem With Lithium


…and why Elon Musk is wrong.

There is not enough lithium mined, and there can never be enough lithium mined and economically processed into end-user forms, to replace the use of fossil fuel internal combustion engines in generator systems. driving force of today’s one and a half billion people. and public transport vehicles equipped with electric motors powered by rechargeable lithium-ion batteries.

I think most of the leaders of the global automotive, aerospace and shipbuilding industries know this, but they are helpless in the face of the demands of politicians who have caved in to the greens who ignore the limits of physical natural resources the production and processing of non-combustible minerals, and which rely on the advice of narrowly, ill-educated and just plain stupid “experts” who have qualifications but no experience of business operations, real-world economics or even rudimentary geology. More often than not, these experts repeat mantras such as “established science” (to prove that climate change is caused by or can be corrected by human activity) or proclaim the unlimited resources of “abundant minerals from the earth” (to prove that non-energy natural resources are unlimited), plus their ignorance has a destructive impact on our standard of living and quality of life based on cheap energy (which they neither see nor understand).

In order to preserve their industry and their well-paying jobs long enough until they can safely retire, today’s top leaders in the global OEM auto industry have accepted the economic power and poison of “transition » green energy in their decisions rather than the free market.

It is generally stated that a modern vehicle with an internal combustion engine has more than 6,000 components and that an electric vehicle, an electric vehicle, is “much” simpler. In fact, the much simpler vehicle still has some 4,000 parts.

Henry Ford pioneered the vertical integration of his eponymous automobile company in the teens of the last century to avoid being controlled by the natural resource “trusts” (monopolies) of his day. By the early 1920s, the Ford Motor Company was manufacturing all of its necessary components in-house except for tires (Ford was a longtime personal friend of Harvey Firestone) and was producing all of its own electrical needs.

As the decline of the auto-industrial era continued after the oil shocks of the 1970s, OEMs abandoned their then-advanced vertical integration (almost always in an effort to raise funds to cover losses and declining margins) and embraced just-in-time delivery of needed parts from the resurgent and expanding external supply base. Rising American labor costs in the 1980s created a mass exodus of OEM automotive suppliers to Mexico and Asia. Soon after, Asian automakers entered American markets and quickly learned enough to destroy the post-war global dominance of the American OEM automobile industry. Chrysler needed rescue first, then GM. Ford survived the downsizing better than the others, but like them had to withdraw from the world markets of the golden age of globalization of the pre-war era (WW2).

Now, in 2022, America’s OEM car and truck assemblers – because that’s the correct term for a company that imports all of its components and assembles them into a vehicle – are being told they must reduce and eliminate the use of imported components and find or develop domestic or friendly country sources to redevelop vertically integrated domestic manufacturing.

At the same time, the government is telling them that they must convert all powertrains to electric drive powered by rechargeable storage batteries.

The answer, of course, is to rebuild the national factories to again produce the 4000 components per vehicle that they will need for electric vehicles. There will be components common to powertrains and fossil fuel and electric vehicles, but electromechanical marvels such as modern multi-speed transmissions as well as efficient gasoline and diesel internal combustion engines will cease to receive attention and skills needed to build them. will wither.

The key component to be researched and manufactured in the country has now become the lithium-ion battery to be used to power the battery electric vehicles to be built. No mass production industry for this type of component has ever been successfully built or operated by an American company. The supply chain for manufacturing lithium-ion batteries for vehicle powertrains does not exist today in the United States.

Let me explain to you how the contemporary (legacy) global automotive industry finds and chooses among its parts suppliers, so that you can understand the dilemma that the contemporary geopolitics of globalization has caused, in particular, in the United States and in Europe.

Of course, external OEM automotive suppliers must have experience building and successfully selling components for the same type of use or for the same type of use. It’s not taken for granted just because of the seller’s size or reputation. All production parts accepted for use by the US automotive OEM industry must undergo the PPAP (Production Part Approval Process) and suppliers must pass a financial due diligence.

PPAP involves passing the real-time functional test under real-world conditions for at least three years typically and for the duration of the part’s warranty. For a lithium-ion powertrain battery, this means current operation with no more than the stated capacity degradation for up to 8 years.

When passing the PPAP, due diligence requires that the component meet the following requirements:

  • Delivery on time, according to specifications, in the agreed volumes and at the agreed price,
  • Just-in-time delivery to agreed locations, regardless of weather conditions,
  • All parts must meet the customer’s agreed specifications within a narrow quality range, and
  • Prices are agreed for the lifetime of a vehicle model

It is the practice of the automotive OEM industry to make the direct supplier of the component or subassembly, the Tier 1 supplier, responsible for all of its (sub)suppliers to meet their PPAP requirements, even if it is the assembler who PPAP the mechanical and electrical quality of the subcontractor.

Very recently, for the first time in 25 years, US auto assemblers have started looking at entire supply chains for critical components (without them the vehicle cannot be sold).

Last year, General Motors and Ford announced “agreements” with domestic semi-finished, non-producing, lithium and rare earth raw material suppliers to supply them with raw materials (lithium) and critical components ( rare earth). permanent magnets), which companies will somehow obtain in the forms needed to produce rechargeable storage batteries and electric motors from a currently non-existent US manufacturing base.

Tens of billions of dollars have already been allocated by the US OEM auto industry to build 7 battery “gigafactories” and several EV platform (battery plus electric motor) factories. Among domestic OEM assemblers, nearly $100 billion has also been allocated to building dedicated, multifunctional BEV plants.

OEM auto assemblers have bet the firm that they can become vertically integrated domestic manufacturers of battery-powered electric cars and trucks.

Yet, to date, not a gram of ESG or rare earth lithium is produced in the United States or Canada.

Look at the following table:

This table from the IEAE tells you that there is no possibility of producing enough lithium to make the batteries that would be required by the demand currently expected after this year.

I believe that the ignorance by politicians and journalists of the universally and necessarily required steps in the operations of any global original equipment manufacturing company is due to intellectual laziness, limits of intelligence and the rapidly declining coverage and quality of American “education”. at all levels. The attempt to eliminate selection on merit, rather than expand it, and replace it with superficial characteristics, as education criteria quickly eroded the ability to select those most qualified for education and specialized training and gave world leadership in science and engineering to Asians. nations.

I repeat that the success of a transformation of fuel for automotive transport from liquid fossil fuels to electricity stored on board in rechargeable batteries depends entirely on the supply of the element lithium.

And that illiteracy and energy and resource illiteracy among our managerial and credentialed classes is the sole reason the American OEM auto assembly industry has blindly bet the farm on a green fetish pursued by some of the dumbest (or most corrupt, or both) politicians. in the history of our Republic.

The BEV revolution will not spawn a second auto-industrial era in America. In fact, it will end the dominance of this industry and ensure that BEVs only survive as luxury vehicles to be driven between enclaves with charging facilities.

Elon Musk tweeted two weeks ago that Tesla may have to get into lithium mining. He said that although lithium is everywhere and in large quantities, the mining industry is very slow to bring it to market.

Elon Musk is a brilliant businessman and an even more brilliant financier, but he is a moron of the mining economy.

I invite readers to challenge my assumptions and conclusions with data, logic, experience, and educational counter-arguments.