The United States government has recently announced their plans regarding securing important minerals, such as lithium and copper, which are vital in the development of electric cars.
These raw materials will be essential for Americas' plans in developing a booming green economy which has been listed as one of the targets of the Biden administration with its decision to unveil a green plan predicted to make 10 million jobs part of Biden's $2.3 trillion infrastructure package.
At the same time, the administration, as well as Democrats, are pushing aggressive climate goals, including the policy to have a majority of U.S cars be electric by 2030 and every car on the road be electric by 2040.
These ambitious goals will undoubtedly raise demand for electric cars in future, especially as climate weary consumers favour the greener options.
For these reasons, it is essential for consumers to also have an economic reason to purchase these cars, a financial incentive of some sorts, and the main way to do that is to make them more efficient.
This efficiency will come from high levels of innovation from the electric car industry, which can only occur if a bustling sector for electric vehicle manufacturing is set up within the United States.
Biden’s plan includes decreasing America’s dependency on China for the importing of raw materials necessary for the manufacturing of electric vehicles, the administration believes that the development of new supply chains which originate from various countries will help close gaps within the supply chain, enabling for a higher supply of raw materials to be provided to the U.S.
A larger supply of raw materials will lead to a reduction in the costs for electric car manufacturers as the larger abundance decreases the price of these materials.
Consequently, electric car manufacturers will be able to take more steps to increase their supply as the decreased costs enable them to allocate more resources towards expanding their operations.
And, this reduction in the price of electric cars will make them a more cost-effective option for consumers, especially once innovation around electric car batteries comes around.
Because of this, the Biden administration also includes a heavy emphasis on research and development which is intended to boost the use of already existing and mined minerals.
The administration's emerging strategy will also include a heavy emphasis on research and development intended to boost the use of already-mined metals, the officials said.
Reuters reported that this plan would effectively expand on ongoing research at the U.S. Department of Energy’s Argonne National Laboratory which has been the main leader of the U.S government’s battery and recycling research program.
The intent of these government policies is to incentivise firms to set up in America to manufacture green technology as cooperation and opportunities provided to these firms by the American government help to reduce risk.
Once these infrastructure projects and green technology policies are put in place and fully operational, it is highly likely that the larger supply of electric vehicles combined with their efficiency will make them the cost-effective option for consumers compared to their petrol and diesel counterparts.
Making electric vehicles cost-effective for American consumers is a significant step forward towards the nation reducing its carbon footprint as a smaller quantity of petrol and diesel cars on the road will reduce emissions from the transportation sector, especially when cars are held up in traffic.
At the same time, these schemes which encourage FDI will also contribute to increasing employment within the American economy helping the economy grow in the short term through a multiplier effect and in the long term as new capital is created within the economy through organic expansion as the nation moves towards a more sustainable and greener future.
Written by Hubert Kucharski