The Commanding Heights Of Global Transportation

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Transportation is going electric and connected—and China exerts vast control over every step of the supply chain.

The world is transitioning away from a petroleum past to one powered by technology and built on batteries. The country that leads this shift will hold the greatest influence on the supply chains, set the global standards, and reap the substantial economic and strategic rewards.

But from minerals to markets, China exerts vast control over every step of the supply chain. China controls nearly 70 percent of global electric vehicle (EV) battery manufacturing capacity, while North America has less than 10 percent. This vast control includes:

Direct or indirect control of 70 percent of the world’s lithium supply, 61 percent of the cathodes and 83 percent of the anodes used in batteries.
Ownership of 80 percent of the rare earths supply needed for U.S. weapons systems and EVs, and control over the processing of this supply.
China produces roughly 75 percent of the permanent magnets that use rare earths, another critical component for EV motors
By 2020, 148 of the 200 lithium-ion battery megafactories under construction worldwide are, or will be, located in China. Just 11 are planned for North America.
More than twice as many EVs sold cumulatively in China compared to the United States. 421,000 of the 425,000 electric buses worldwide are on Chinese roads.

Competing with China on EV leadership has geopolitical consequences.

The 21st century will be defined by the United States’ relationship with China, a country that has emerged as the greatest competitor to our nation on the world stage.

Through its Made In China 2025 strategy, China is working to secure commanding leadership positions in emerging industries of great strategic and economic value. Central to this strategy is the next generation of transportation – connected, shared, autonomous and electric vehicles – and the batteries that power them, and the 5G technology this technology will be built upon.

If the United States fails to respond, it risks swapping its current reliance on an unstable oil market for its transportation fuels, for a dependence on China for its transportation requirements for decades to come. American global authority, national security and the country’s auto industry – the backbone of the U.S. advanced manufacturing sector – are all under threat.

Countering China’s hold on the EV supply chain will create American jobs.

A bipartisan, federal response is required for the United States to compete with China’s ownership of the next generation of transportation. The Commanding Heights Of Global Transportation, a new report from SAFE, provides a series of comprehensive recommendations that bolster American competitiveness in this critical sector, strengthening U.S. economic and national security, and ultimately providing a pathway for the United States to have a transportation system that works in its own national interest.

Competing aggressively with China is also a net creator of American jobs. Independent analysis commissioned by SAFE and conducted by Keybridge Public Policy Economics found the Commanding Heights policy recommendations will create 647,000 jobs, including:

More than 270,000 jobs through investment in transportation manufacturing grants and tax incentives alone.
Nearly 154,000 jobs through incentives that make it cheaper to buy medium- and heavy-duty electric vehicles, like trucks and buses.
108,000 jobs by advancing next-generation transportation—such as autonomous vehicles—and semiconductor technology.
28,000 jobs through developing a critical minerals supply chain and refining that is not controlled by China.
More than 29,000 jobs through measures to expand U.S. charging infrastructure and energy storage.

Commanding Heights has the policies to compete with China’s control of these critical supply chains, from minerals to markets.

The Commanding Heights Of Global Transportation contains comprehensive recommendations that enable the United States to compete with China by:

Supporting the advanced fuel vehicle market and domestic manufacturing
- Reforming the federal tax credit for EVs and expanding a tax credit for medium- and heavy-duty EVs.
- Tax credits and funding that fosters the retooling, expansion and establishment of advanced transportation manufacturing.
Developing a critical minerals supply chain that is not controlled by China
- Includes creating a domestic rare earths processing cooperative to ensure uninterrupted supply of the minerals required for U.S. high-tech and defense system applications.
- Recycling policies for EV batteries to create a closed loop resource supply chain.
Advancing next-generation transportation technology
- To compete with Chinese companies, allowances for deploying novel design autonomous vehicles (AVs) on public roads must be expanded from 2,500 to 100,000 per manufacturer as long as they are as safe as current vehicles.
- A clear pathway for regulatory reform and certainty at the federal level, as developers currently must contend with a patchwork of regulations at the state level, while China can make rules by fiat.
Combating predatory economic practices
- Includes issuing an antitrust waiver to allow U.S. automakers to work together with global industry to address issues related to doing business in China and supply chain issues.

The United States must commit to this next generation of transportation, with federal policies and a national strategy that match the ambition needed to counter China’s dominance in this critical sector.

Read the report.

Key Commanding Heights staff

Admiral Dennis Blair, U.S. Navy (Ret.): Adm. Blair is the former Director of National Intelligence and Commander in Chief, U.S. Pacific Command. He is the current Chairman of SAFE.

Jeffrey Jeb Nadaner: Jeb is the Executive Vice President of Government & Public Affairs at SAFE and the Executive Director of SAFE’s Commanding Heights of Global Transportation initiative.

Abigail Wulf: Abigail is the Director of the Ambassador Alfred Hoffman, Jr. Center for Critical Minerals Strategy at SAFE.

Gidon Feen: Gidon is the Chief of Staff for the Commanding Heights of Global Transportation initiative.