Electric cars and the global race to go green

Electric vehicles are becoming an increasingly common sight on the streets of London and other big cities. The number of EVs in the UK recently passed the half a million mark, from basically zero just 10 years ago. Everybody knows of Elon Musk and the story of Tesla, which is now the world’s most valuable automaker. But who does the world’s richest man depend on to produce his vehicles? And how are electric vehicles really changing the world?

I wrote a book to find out, and uncovered a hidden supply chain made up of secretive billionaires that is to a large extent controlled by China. Materials that end up in your electric vehicle have been on a journey of many thousands of miles, from countries such as the Democratic Republic of the Congo and Indonesia to China and back.

It’s a supply chain that will define the economic competitiveness of many countries and determine who gets the jobs and industries of the future. Clean energy and electric vehicles – along with AI and quantum computing – will dominate this century. Yet who will capture the value from these industries? A failure by the west to catch up will result in increasing geo-political tensions. Much of the manufacturing sector in the US and Europe has been hollowed out, as economies focused mainly on services. Yet a concentrated reliance on China is risky – what happens if China invades Taiwan, or escalates its activity in the South China Sea? 

Part of the problem has been the focus of Silicon Valley and the UK on software and creating apps. This is important for electric vehicles too, for sure. But it’s the battery that has made electric vehicles possible. A hundred years ago electric vehicles failed to overtake petrol cars in part because batteries were not good enough. Henry Ford’s wife drove an electric, but she was a minority. The result was a century or more of addiction to fossil fuels that is ruining the planet. 

Now we can drive 200 miles or so without worrying too much – a game changer if paired with good charging infrastructure. The battery can account for 40 per cent of the value of a car, yet who makes these batteries? At the moment it isn’t Tesla. Global sales are dominated by a Chinese company based in a south-eastern Chinese city, Ningde, better known for its fish than tech.

The company CATL produces batteries not only for Tesla, but also Volkswagen and Mercedes-Benz owner Daimler. It has minted more billionaires than Google and is listed on the stock exchange with a value of a trillion RMB (£124 billion). These heavy batteries also require lots of metals such as lithium, cobalt and nickel to store and release electricity. But who controls these resources? Here too many Chinese companies, including CATL, are advancing projects in countries such as Argentina, the DRC and Indonesia that will be critical to electric vehicles due to the amount of resources they possess. 

China has set out a clear ambition to be a leader in electric vehicles and with that comes the full support of the Communist Party. President Xi Jinping’s most important constituency is the growing middle class, who want better air, better education and better healthcare. Electric vehicles play perfectly into their demands. Resource-rich countries such as the DRC and Indonesia are keen to hedge their exposure to China via deals with western mining companies and automakers such as Tesla. Western companies are not completely out of the race.  But the combination of Chinese capital and expertise will prove hard to resist. And with that will come political influence. If you’ve invested billions in Indonesia, you are unlikely to sit back and cede all political influence to the US. A great geopolitical game has opened up which will involve a new group of countries that will feature in a geopolitical clean energy power matrix. 

Politicians in the UK and the US are trying to reduce the risks by creating a separate global supply chain running through “friendly” allies such as Australia, Canada and South Korea. US officials openly talk about China being an “adversary” that should not supply the country with batteries or minerals. But the talk is happening before the action, risking a continued dependence on China but on less friendly terms. The US and UK have few battery factories and almost no production of battery materials. In the UK, the biggest battery factory is owned by a Chinese company, Envision, while in Germany, China’s CATL opened the country’s first battery Gigafactory.  

As a result, we will be reliant on China this decade to decarbonise our economies and fulfil politicians’ climate change promises – with unpredictable results. We’ve also signalled to China that we want to build a separate trading system that excludes them. As they watch the west struggle to catch up, what leverage will they be able to exert in the near-term?

China’s end-goal is to produce high-value Chinese electric vehicles that they sell to the world. Instead of Mercedes or VW, we could see cars by XPeng, Nio and BYD on the streets. With the bulk of the supply chain in their hands, it’s perfectly possible that they will prioritise their own automakers with batteries and raw materials before foreign automakers. Especially amid a political crisis or period of tension. 

Henry Sanderson is a journalist and author

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