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The Geopolitics of Electric Vehicles

Todd Medema
Jul 31, 2019 · 7 min read

Part 1 of a series on electric vehicles. Part 2: The Business of EVs.

In 2016, Americans drove more than 2 trillion miles.

Converting to an all-electric fleet would reduce the environmental impact of all those cars… but what challenges would we face, and what can we do about them?

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Image courtesy of Unsplash

EVs face geopolitical challenges on three fronts: getting the resources, fighting incumbent industries, and gathering political support for climate change. But first, let’s talk about why EVs are important:

Starting with the Why

  1. Switching US cars to electric would save 750 million tons of CO2 + CO2 equivalents (CO2e) per year¹ and significantly improve air quality.
  2. We cannot meet the Intergovernmental Panel on Climate Change (IPCC) target of being carbon neutral by 2050 without eliminating gas as a source of emissions, as each gallon produces 20 pounds of CO2 when burned. (Carbon Capture won’t be enough)
  3. Moving off gasoline eliminates the need for 91 billion gallons of gas per year. This makes the US, and each of us as individuals, no longer dependent on oil companies & foreign cartels.
  4. Eliminating our reliance on oil for transportation would save US taxpayers $10 billion per year. That doesn’t include the cost of the many wars we’ve fought in part due to oil.
  5. EVs are safer, cheaper to operate, more efficient and accelerate faster.

Sounds good, right? But to get all these benefits, we’re going to have to overcome a few challenges, including…

Challenge 1: Getting the Resources

New technologies often require new resources that shift the global balance of power, and EVs are no exception. Their batteries and motors require copper, nickel, lithium, cobalt, graphite and rare earth metals. But how strategically risky are those materials?

  • Copper: Utilized by a variety of industries, the third most-recycled of all metals, and with significant reserves spread across three continents, the additional demand EVs place on copper is unlikely to become a strategic threat. The Royal Society of Chemistry (RSC) gives it a 4.2/10 supply risk.
  • Nickel: Used in stainless steel, heating elements and desalination, EVs currently only account for 4% of nickel demand. RSC gives it a 6.2/10 supply risk.
  • Lithium: Primarily used in batteries. EVs and stationary battery storage are predicted to drive significant growth in lithium demand, on the order of 20%+ per year. RSC gives it a 6.7/10 supply risk.
  • Cobalt: Used for magnets, turbines, generators and blue paints and coatings. Over 70% comes from the Congo as a byproduct of copper mining, making it difficult to scale and unpredictable. Coblat also faces significant humans rights issues. 7.6/10 supply risk. Researchers are actively working on alternatives.
  • Graphite: Used in lubricant and high heat industrial applications. Synthesizable from carbon, there is no strategic bottleneck to graphite as a material — however, 97% of cheaper naturally-occurring sources of graphite are limited to China, Mexico, Canada, Brazil and Madagascar. RSC does not provide a risk score because it is not a raw element, but based on their methodology, I estimate it to be 6.1/10².
  • Rare Earth Metals: A collection of elements with uses ranging from magnets to lenses and displays. Although technically common in the Earth’s crust, China has long dominated their supply (95%) due to limited concentrated deposits, resulting in high export tariffs that helped contribute to the rise of tech manufacturing in China. 9.5/10 supply risk. However, alternatives exist and researchers are working on more options.

Let’s take a look at how these supply risks translate into actual risk factors, based on how much of that material is used in an EV (Risk Factor = Total Cost * Supply Risk / 1000):

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The above analysis in spreadsheet form here

While the EV supply chain poses challenges, combustion cars face similar issues. Their emissions control systems are heavily dependent on cerium and platinum (supply risk 9.5 and 7.6), and their computers, touchscreens and safety cameras use the same rare earth metals as EVs. Hybrids (aka any gas car getting over 39 mpg) also rely on the same resources as EVs for their batteries and motors, just in smaller quantities.

Thankfully, the US is exploring a national electric vehicle supply chain that would help stabilize prices and reduce geopolitical risk. Meanwhile, we’re starting to recycle rare earth metals and develop alternatives to many of the riskiest resources.

Conclusion: Resource supply risk is high but trending down.

Challenge 2: The Incumbents (Oil, Gas and Auto)

Another threat to the mass production of EVs is the combined weight of the oil, gas and combustion automotive industries, which wield over $3.3 trillion per year in revenue ($2T for oil + gas, $1.3T for auto).

In the US alone, oil and gas have over 700 lobbyists and spend over $125 million per year. — that’s 20% of a presidential campaign, per year. And these lobbyists are good: in the 80’s, they delayed adoption of airbags by 20 years.

They spend over $35 billion per year on ads to influence consumers, including ads that specifically attack electric vehicles.

And, they’ve suppressed climate change research since the 1980’s (even back then, there was concerning evidence against fossil fuels).

Put another way: There are a lot of rich people who will lose a lot of money from electric vehicles, and there are plenty of legal ways to spend money to suppress innovation — including lobbying, lawyers and ads.

Conclusion: Incumbent industries pose a major threat to EV innovation, but we can fight to remove money from politics, and vote with our wallets and investments to support innovative companies.

Lobbying: Lowering Emissions Standards

One specific example of incumbent lobbying at work: Automotive companies struggling to make money on EVs are currently pushing to lower emissions standards. Apparently it’s hard to make a gas-burning engine not pollute, so profit-seeking companies would rather lie, cheat and steal than innovate.

Which is sad, because we’ve been able to produce quality, performant EVs since the EV-1 in 1996 (built by GM, no less!) In the end, GM destroyed all but 40 of them, even though many of the lessees were willing to buy them in cash.

Even as far back as 1905, there were thousands of electric cars in New York City, where they were valued for being clean, quiet and reliable.

Fast forward to today, where 58% of new cars sold in Norway are EVs — proving that the technology is mature enough for global adoption.

Unfortunately, most US car companies making EVs simply do so as “compliance” cars. Their models just barely meet California requirements, are only sold in the states they absolutely must, and are never advertised.

One thing is for sure: lowering emissions standards will make US-made cars less competitive globally — and at home. As more countries set out to ban the sale of new combustion engines as soon as 2030, the US auto industry could become globally irrelevant in just 12 years if it can’t move beyond gas. Even Chinese manufacturers expect to stop making gas engines by 2025.

Every year we delay results in missed efficiency learnings that will make it harder for the US auto industry to compete:

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The cost of new technologies drop as companies spend more time working with them.

Challenge 3: Support for Climate Change

Unfortunately, the very nations with the resources to lead the way in transitioning to a clean, healthy future are the ones who deny it the most.

Because the US is a (flawed) democracy, this means that if enough people don’t think we should fix the problem, it won’t happen. Which is a shame since, even if climate change turned out to be less of a problem than we fear, we’d still end up making the world a nicer place to live (see: air pollution kills 4.2 million people per year).

It’s easy to become disenfranchised when you hear how many people in the US think humans don’t have an effect on the climate (13% of citizens and 28% of Congress). But there is hope.

To start, climate change belief or denial isn’t black or white — rather, it exists on a spectrum — and both extremes are problematic. What we can do is educate ourselves and take calculated, effective action — rather than ignoring the problem or making exaggerating claims.

If done well, people can change their minds (including Republican politicians). Some, as they see the flood of evidence. Others, as they see their hometowns flooded.

Conclusion: Lack of belief in and desire to fix climate change will hamper many forms of innovation, not just EVs. But, unlike global resource wars, this is a challenge that individuals can help overcome.

In Summary

Electric vehicles, like solar panels and many other new emission-reducing technologies, face a geopolitical war on three fronts to acquire resources, overcome incumbents, and gain public support.

While there’s not much individuals can do about rare earth metals, there’s a lot we can do to help overcome incumbents and gather public support:

More Electric Vehicle analysis coming soon. Make sure to like and follow so that you don’t miss out!

[1] ((20 pounds of CO2e/gallon of gas burned + 5 pounds for upstream emissions) * 91 billion gallons) — (1 pound of CO2/kWh * 750 billion kWh) = 750 million tons of CO2e. In some parts of the country that have already stated adopting renewables, electricity is as low as 0.3 pounds/kWh; if the entire US was that clean, total savings would exceed 1 billion tons per year.

[2] Crust abundance is high, but recycling rates are low. Production concentration is high, and the average political stability of the top producers is medium. Currently comparable to Lithium’s overall position (6.7), but future innovations in artificial graphite will bring it closer to Carbon’s (4.5).

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