The automobile was born in America. But after a century reign, the vehicle is being reassessed alongside new developments in alternative energy. Last week, GM and Ford partnered with Tesla, a move which will allow all three companies to play off one another’s charging infrastructures, offering increased value to their customer bases.
Automotive companies require new supply chains and new ways of thinking if they want to compete in one of the fastest-growing sectors (S&P Global forecasts that EV sales in the U.S. alone could reach 40% of total passenger car sales by 2030). Through iconic brands like General Motors, the U.S. automotive industry has long been revered as a leader in technological innovation worldwide. Although key parts of U.S. manufacturing moved overseas in the 1970s, the industry’s fascination in the public’s imagination never wavered, and American companies like Ford and Tesla have continually reinvented themselves alongside disruptions like GPS and driver-assisted features—the latest partnership between the two companies further underscores the adaptability of U.S. companies.
As the EV race accelerates, the U.S. seeks to reestablish its position over the industry it pioneered and the newest clean energy markets. To meet this challenge, policymakers need to double down on investments in EV infrastructure and a new North American supply chain while channeling democratic values into production and sourcing.
Despite the U.S.’ proven track record with innovation, especially in the automotive space, there are no guarantees it will lead the emerging EV sector. One only has to look at how the U.S. lost its competitive advantage in the solar supply chain and manufacturing through a series of misaligned government incentives and private sector realities. Although the U.S. introduced policies and tax incentives to encourage solar installation, supply chains for the sector emerged overseas, as building out end-to-end infrastructure was costly. On the private sector front, investors did not want to hemorrhage capital on manufacturing facilities when this component could easily be outsourced abroad, and commercial banks did not make it easy to obtain loans for this purpose. Other countries, most notably in Asia, invested heavily in solar R&D, and the U.S. has been playing catch-up ever since. The U.S. losing its edge in solar serves as a warning for the EV race: Just because a country is the first to land on the moon does not mean it will lead the world in harnessing the sun’s power.
Luckily, Washington recognizes the importance of investing heavily in on-shore manufacturing. Although the Inflation Reduction Act offers tax incentives for electric vehicles, the Department of Energy is making it easier for U.S. battery and EV companies to obtain loans for manufacturing facilities, as the scaling process takes years to become cost-effective.
Investing in an EV supply chain and infrastructure will provide an avenue for U.S. job creation (the U.S. Energy and Employment estimates that 2021 saw EV jobs increase by 26.2%, outpacing traditional jobs by several percentage points) while minimizing dependency on other countries for materials. As a nation committed to democratic values, the U.S. promotes transparency and openness–principles crucial in ensuring ethical production practices. Investing in domestic manufacturing capabilities, on both the provincial and federal level, incentivizes companies to maintain a heavier presence in a market with proper oversight. Through its leadership in international institutions like the World Bank, the U.S. can continue supporting countries that adhere to democratic standards in their own economies.
Since its founding, the U.S. has remained an unfinished experiment in democracy, designed to integrate more people into the democratic process and account for human progress and innovation. As the EV space develops from an emerging market frontier to a global industry and transitions the world off fossil fuels, policymakers should double down on a central U.S. principle: Creating a better way of doing business.
Jing Nealis is the CFO of SES AI Corporation, headquartered in Boston, a global leader in the development and manufacturing of high-performance lithium-metal (Li-Metal) rechargeable batteries for electric vehicles and other applications. She has 18 years of global finance and operations experience in private and public companies and led several emerging energy transition companies through successful scale-up and commercialization.
