Interesting article on the new Climate Bill

[beerhoffman]

I had not read about this provision on sourcing requirements yet.

https://theconversation.com/the-cli...qualifying-for-them-nearly-impossible-188282?

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[greenne]

I see this....but the alternative was worse. Ford was going to bust the 200k cap by the end of the year and most manufacturers were on pace to go past 200k in the next year or two.

Short term pain, but in the long term we *really* need to encourage sourcing these materials at home. Looking to China for raw materials is problematic for several reasons.. just look at the supply chain issues we have now as foreshadowing.

 

[fitek]

It seems inevitable we will have some conflict with them. Don't want to end up in the situation in which Germany finds itself-- crunch time and DE caves to a geopolitical adversary because it's dependant on their exports.

 

[greenne]

It seems inevitable we will have some conflict with them. Don't want to end up in the situation in which Germany finds itself-- crunch time and DE caves to a geopolitical adversary because it's dependant on their exports.

Depending upon one country as the nearly exclusive provider of a critical material is a national security threat. May not seem like it now, but we don't want to find out 10-15yrs from now that the vehicle/battery production becomes severely hampered due to political discourse with China.

 

[Mr. Flibble]

It wasn't that log ago (1990s) that the US was one of the largest producers of Lithium. The US basically stopped as it was easier and cheaper to let China do the work.

The good news is that Lithium is an extremely common material. As the need for it goes up, the list of places refining it will go up as well. There is enough Lithium in the springs in the Salton Sea in California all by itself to meet the needs of the entire US for the next 20 years, it just needs to become profitable to really refine and extract it.

US, Canada and Mexico all have plentiful access to Lithium, as demand goes up, the demand to extract it will go up as well.

China probably won't be leading any of these spaces in the long term. The reason for that is twofold:

1 - Demographics. The 1 child policy is decimating the younger population.
2 - Energy Supply. China is fully dependent on the gulf states and constant oil tanker shipments. They are not energy self-sufficent and will suffer some severe economic shocks as a result.

Either way, it will make for some pain in the short term as all these transitions begin to take place.

 

[fitek]

I haven't read the bill, but I'm hoping, if we're going to throw a bunch of money at the problem, there is money for charging cuz big batteries matter less when you can fast charge in a few minutes... I watched a review of the Genesis GV60 (800 volt system) and IIRC it was 18 minutes to charge from 0%-80%! For my own typical road trip down to Portland area I could get by just stopping for 5-10 minutes at a DC faster charger, basically stretch a little and hit the restroom. Ford's EVs take 45 minutes to do 10-80%!

I have an ebike that has a battery half the size of what's standard... 20% weight reduction and only 30% reduction in range. And it's enough range for me as it is.

 

[FordLightningMan]

It was odd that the old bill that was in place would essentially only have been for foreign vehicles going forward, as the domestic car companies were the ones meeting the cap. The new bill seems to have been written largely in response to the old bill essentially financing foreign companies.

 

[greenne]

It wasn't that log ago (1990s) that the US was one of the largest producers of Lithium. The US basically stopped as it was easier and cheaper to let China do the work.

The good news is that Lithium is an extremely common material. As the need for it goes up, the list of places refining it will go up as well. There is enough Lithium in the springs in the Salton Sea in California all by itself to meet the needs of the entire US for the next 20 years, it just needs to become profitable to really refine and extract it.

The US used to be leading in a lot of industries and I still remember when "Buy American" was a thing. It does seem like politically "Buy American" has been replaced with "free trade" and loosely restricted capitalism in search for quick money.

That and the public seems more interested in paying a few cents (or a few dollars) less for something made overseas vs something made domestically.

 

[cvalue13]

Short term pain, but in the long term we *really* need to encourage sourcing these materials at home.

That may well be true, but the article (even if only briefly) points towards how the current tax bill appears to include within it several “poison pills.”

“Although EV manufacturers are already pursuing plans to develop supply chains that meet these sourcing requirements, proposals for mines and processing facilities often face challenges. Indigenous and environmental concerns have slowed a proposed lithium mine in Nevada. In some cases, key materials, such as cobalt and graphite, are not readily sourced domestically or from fair-trade allies.”

This briefly points to what are only two of these poison pills.

Forstly, the raw materials for *current* battery technologies are potentially unavailable as a matter of geology. Changing geology on any time scale is impossible, and changing battery technologies to work around these geologic constraints is almost certainly unlikely within the current bill’s proposed timelines. Accordingly, this poison pill in the pessimistic view amounts to saying, emphasis on the parenthetical,, “we’ll give you a $7,500 refund (so long as pigs fly).”

Secondly, even we’re the above geologic and technological constraints missing, there would still be perhaps the larger social poison pill: aspirations paired with an overriding NIMBY mentality (for those unfamiliar: Not In My Back Yard). Even discounting the perhaps disingenuous marketing efforts of anti-battery interests to suggest mining and similar extraction efforts are catastrophically bad for the environment, there are still left many strong indications that - in effect - everyone supports mining and similar efforts, only so long as they need not see, hear, smell, touch, or know of where it is occurring.

China currently produces all these resources and provides all these services not only because they have been prophetically planning for it for decades, but also because - as a precondition allowing their planning - it faces nearly zero social obstacles to execute on these plans, by providing both philosophical disinterest in environmentalism of the sort we have adopted in the west, as well as fleets of dirty hands willing, desperate, or forced to do the menial work required of these industries.

There are arguments for additional poison pills embedded in the current bill I’m sure, but these two alone jump out at me as being sufficient to cast grave doubt on the meaningfulness of the bill after say 2023 or 2024.

By way of background, I’ve just exited 15 years in the oil and gas industry, and so have - albeit from a different industry - plenty of perspective on an American people who (by-in-large) simultaneously demand “clean” energy while at the same time have seemingly zero appetite to curb their own voracious appetite for energy.

For just one bit of proof: take a look at Boden’s earlier climate efforts, and you’ll notice one thing glaringly absent - a single policy that requires even a single individual American to accept any degree of discomfort or throttling of their energy appetite. The policies say, for example, things like “make HVAC more energy efficient,” but never once say, for example, “require government buildings to set their thermostats to 80 degrees in summer.”

From that mentality of wanting it all while willing to give little to nothing, it becomes hard to imagine how by 2024 these manufacturers can meet the bill’s domestic sourcing requirements.

PS: lest someone take my above skepticism to be borne of some O&G industry indoctrination, bare in mind I have 21KW of solar on my roof, and just early-adopted a F150L. I’m an “all-the-above” energy guy, who I like to think merely has some modicum of practical observation to add.

 

[Mr. Flibble]

The US used to be leading in a lot of industries and I still remember when "Buy American" was a thing. It does seem like politically "Buy American" has been replaced with "free trade" and loosely restricted capitalism in search for quick money.

That and the public seems more interested in paying a few cents (or a few dollars) less for something made overseas vs something made domestically.

It makes sense in a Global context. After all, if you could pick up a Ford F150 Lightning brand new for $10,000 no strings attached, would you do it? Of course you would.

Price matters.

No matter how you slice it, massive container ships running on the open ocean are incredibly cheap to operate. There is a great book about this called:

The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger

There is most likely a coming shift in world demographics and manufacturing costs that will drive up the cost of labor and assembly in China, which will make it cheaper to manufacture locally in the near future.

This means that a lot of jobs will likely be coming back to North America (and especially Mexico) due to all these changes.

 

[world2steven]

I had not read about this provision on sourcing requirements yet.

https://theconversation.com/the-cli...qualifying-for-them-nearly-impossible-188282?

The $7500 question for some of us is going to be 'retroactivity', i.e. when do the $80k limits kick in? Also, what about people who purchased e.g. Hyundais or Kias?

 

[greenne]

The $7500 question for some of us is going to be 'retroactivity', i.e. when do the $80k limits kick in? Also, what about people who purchased e.g. Hyundais or Kias?

We won't know anything for sure until it is signed into law and the IRS gets its hands on it. The IRS is supposed to provide guidance by the end of the year on what EV qualifies for what--stay tuned.

For current customers it seems to be written that if you buy or at least enter into a contact in 2022 you are safe to operate under the old rules, even if the vehicle is delivered in 2023. I could be reading that wrongs, but that is what it seems to say.

I'm not seeing anything that goes back to delivery(in service) before the bill is in effect. So if you purchased already you would follow the old rules.

 

[MM in SouthTX]

I came across an interesting study about energy subsidies from The University of Texas, which is a very liberal institution. Excerpt is below, followed by the link to the study.

Renewables receive signifiantly more support than conventional technologies on the basis of annual support relative to annual generation from all existing generation assets ($/yr / MWh/yr = $/MWh). Depending on the year, coal receives $0.5-$1/MWh, hydrocarbons $1/MWh, and nuclear $1-2/ MWh. Support to wind falls from $57/MWh to $15/MWh over our study period, and support to solar declines from $260/MWh to $43/MWh.

https://energy.utexas.edu/sites/default/files/UTAustin_FCe_Subsidies_2018_April.pdf

 

[orangefirefish]

We won't know anything for sure until it is signed into law and the IRS gets its hands on it. The IRS is supposed to provide guidance by the end of the year on what EV qualifies for what--stay tuned.

For current customers it seems to be written that if you buy or at least enter into a contact in 2022 you are safe to operate under the old rules, even if the vehicle is delivered in 2023. I could be reading that wrongs, but that is what it seems to say.

I'm not seeing anything that goes back to delivery(in service) before the bill is in effect. So if you purchased already you would follow the old rules.

Maybe there’s something I’m missing… but why are folks fixated on the proposed 80K limit when the Lightning may not even qualify in 2023 due to the foreign content?

 

[greenne]

Maybe there’s something I’m missing… but why are folks fixated on the proposed 80K limit when the Lightning may not even qualify in 2023 due to the foreign content?

We don't have enough info to know if the Lightning will/won't qualify yet in 2023.

However one of the few things you *might* be able to control is MSRP as the Lariat is right at the $80k mark and a few option choices could mean $7500 or NOTHING.

Of course the battery content could disqualify the Lightning making it a moot point....but here we are.

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