Strengthening Ohio's Energy and Automotive Supply Chain

As we work to restore what has been lost economically in Ohio during the pandemic, we should be looking for opportunities to leverage the state’s strengths to create jobs in a fast-emerging global industrial sector that has the potential to sustain our economy for the longer-term. There may be no industry where the opportunity is greater than  in the battery materials supply chain.

The Battery Materials Market

Spurred primarily by accelerating global demand for electric vehicle production, the annual Lithium-ion (Li-ion) battery market is already estimated at more than $35 billion with projections that it will triple over the next five years. Long-term forecasts suggest that this energy storage market will attract as much as $620 billion in investment over the next 20 years.

According to Benchmark Mineral Intelligence—a leading battery industry analyst—as of January 2019, there were 70 battery megafactories in the pipeline worldwide. Just one year later, there were 125—more than 50 of which are already operating. As battery manufacturing has ramped up, battery prices have plummeted, leading to projections that EVs will reach price parity with internal combustion vehicles by the mid-2020s.

As it stands, most of the global Li-ion battery supply chain is in Asia. In fact, China has about 60 percent of the global manufacturing capacity while the U.S. is home to only 13 percent.

As Benchmark’s managing director testified to the U.S. Senate last year, “We are in the midst of a global battery arms race in which the U.S. is presently a bystander.” While the opportunity is massive, so is the risk of inaction. If we allow our current weakness in the Li-ion market to persist, Ohio’s economy will suffer the consequences, particularly the auto manufacturing sector.

Battery Supply Chains and National Security

A failure of the U.S. to lead on energy storage will also increase national security risk. As the Center for Naval Analysis’s Military Advisory Board put it: “Ceding U.S. leadership [on advanced energy] has inherent national security risk, including loss of global influence and diplomatic leverage.”

Meanwhile, The Department of Defense (DoD) is increasingly focused on the role of storage in enabling key operational capabilities. Military applications include communications, tactical ground vehicles, unmanned systems, and directed energy weapons.

In addition to its devastating health and economic consequences, COVID-19 has exposed serious vulnerabilities in a number of supply chains, and the automotive industry is among that list. In addition to creating good-paying jobs, turning our focus now to building a robust domestic battery industry—with Ohio in the lead—will ensure that the U.S. has access to the critical materials and technologies needed to support these key military capabilities.

Moving Ohio to the Head of the Pack

The good news is that there are clear signs of progress in our state. Last December, GM announced plans to partner with LG Chem, a large Korean battery manufacturer, to build a $2.3 billion battery manufacturing plant adjacent to the site of GM’s shuttered Lordstown facility. The battery plant will produce enough batteries to support 500 thousand EVs a year—and could sustain 1,100 jobs. Governor DeWine and Lt. Gov. Jon Husted with the help of JobsOhio—and a lot of community support—successfully lured the plant to Mahoning Valley and put Ohio on the Li-ion battery map. However, the supply chain that feeds the GM-LG Chem plant remains, at the moment, mostly in Asia. We need a bold plan to bring that supply chain to Ohio. After all, our manufacturing and research capabilities, combined with the state’s highly skilled workforce, means there’s no better place. 

Ohio is already home to several companies active in the supply chain, including BASF Toda America LLC (BTA) which produces cathode materials for Li-ion batteries in Elyria, and Dana Corporation which produces thermal management systems for Li-ion batteries. And several Ohio universities are also leaders in battery R&D, including Ohio State, Wright State, Case Western Reserve University, the University of Dayton, and the University of Akron.  Additionally, Glenn Research Center manages Li-ion battery development for the International Space Station. Air Force Research Lab at Wright Patterson Air Force Base supports research on Li-ion for military applications, including aircraft, unmanned aerial vehicles (UAV), and directed energy weapons.

Purposeful Policy is Needed to Lead

Ohio is at a key moment. While our immediate focus is rebuilding from the pandemic, we must also be careful not to miss opportunities to rebuild a more resilient economy that puts Ohio—and the United States—first. Though it may not be obvious on the surface, the global transition to electric transportation is well underway. As Ohio looks to jumpstart economic growth, the state should develop a plan to capture this opportunity.

China’s success in attracting battery supply chain investment has been the product of specific policies targeting the EV market and providing a leg up to domestic battery manufacturers. We should take a page from their book and put Ohio in the lead on EVs and the supply chain that produces them.

The time to act is now. If we sit still, we will only make it harder to attract future investment—risking Ohio being left behind. That is a risk we cannot afford to take. Let’s reshore our manufacturing potential and put the good men and women of Ohio to work in a sustainable industry with good-paying jobs.

About the Authors

Daniel Sawmiller

Ohio Energy Policy Director, Climate & Clean Energy Program

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