There has been a lot of concern about battery materials and global geopolitical risks. In some ways, it would be easy to just keep relying on China for rare earth minerals, lithium, and other things we need for the energy transition. But, as we’ve learned in the past, depending on somebody too much gives them a lever they can use against you.
The bean counters who think in terms of quarterly profits will disagree and say that we’re mis-allocating wealth, but the risks have proven themselves in the past. In 2010, China’s decision to withhold supplies from Japan resulted in Japan’s vulnerability to compromise on a border dispute. This event could have been a driving force behind Japan’s decision to take a distinct approach to clean technology, which could potentially explain their continued emphasis on hydrogen technology for automobiles. In contrast, most other countries are currently prioritizing the development of battery-electric vehicles.
So, if we don’t want to get the rug pulled from under us in the future, and set the clean technology revolution back, we’d better find a better rug to stand on.
Fortunately, U.S. and European leaders have wised up. 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 purposes of 2 this section, the term ‘new clean vehicle’ shall not include–
‘(A) any vehicle placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle (as described in subsection (e)(1)(A)) were extracted, processed, or recycled by a foreign entity of concern (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act (42 U.S.C. 18741(a)(5))), or
‘‘(B) any vehicle placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle (as described in subsection (e)(2)(A)) were manufactured or assembled by a foreign entity of concern (as so defined).’’
Foreign entities of concern refer to countries that are not trusted by the US government and could pose a potential threat to US interests. This phrase is used to describe nations that may be deemed untrustworthy or dangerous in the eyes of the US. It is not uncommon for the US to impose sanctions or other measures on these countries to protect its national security and interests. In this case, they’re putting battery materials from China on uneven footing to give minerals from the U.S. and allies a better chance.
Much of the news of response to this has come out of the United States itself and Canada, but it’s important to note that the ripple effect extends to Europe. They’re facing a similar problem, and need more domestic lithium production, and not just for automakers to sell into 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 a significant milestone for Mercedes-Benz, enabling greater vertical integration and localization in its drive technologies as part of its electrification goals in Europe. The partnership with Rock Tech will allow Mercedes-Benz to provide its battery partners with high-grade lithium hydroxide, which will aid in scaling up production of fully electric vehicles.
“For Mercedes-Benz, the shift towards electric mobility also means a change in our supply chains. Three goals are central to us: Sustainability, raw materials security and localisation of procurement,” said Markus Schäfer, Member of the Board of Management of Mercedes-Benz Group AG. Chief Technology Officer, Development & Procurement. “Today’s groundbreaking in Guben is therefore another milestone for Mercedes-Benz towards 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.”
Mercedes-Benz and Rock Tech’s strategic partnership was revealed during the German-Canadian summit held in August 2022 in Toronto. The partnership 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 across all aspects of the automotive value chain, with a particular focus on the development of natural resources.
According to 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. Additionally, the lithium hydroxide supplied by Rock Tech must originate from mining sites that have undergone an audit by the Initiative for Responsible Mining Assurance (“IRMA”).
Part of a Bigger Effort
Mercedes-Benz pointed out in the announcement that it has been doing other things to strengthen the lithium industry in Europe. The company has been actively pursuing various initiatives to ramp up its electric vehicle production capabilities. The company will leverage its battery plants located 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. Moreover, the eCampus center for competence in research and development, which is being developed at the heart of the Untertuerkheim plant, will focus on developing new battery and battery cell generations.
Mercedes-Benz is also working on increasing its renewable energy generation capabilities. The company aims to cover over 70% of its power generation needs with renewable energy sources by 2030. It has begun construction of its own battery recycling plant in Kuppenheim, Germany, and is developing a high-power charging network in Europe.
Lastly, 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 the enablement of EV charging with green energy.
This latest announcement, combined with these other efforts, show us that the company is pretty serious about not just selling EVs, but making sure that the materials come from more ethical and geopolitically safe sources. Combined with announcements like this we’ve covered from other companies, it’s clear that the industry is trying to do the right thing.
Featured image provided by Mercedes-Benz.
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