The Commanding Heights Of Global Transportation

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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.

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.

SAFE’s latest paper, The Commanding Heights Of Global Transportation, found 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, 107 of the 142 lithium-ion battery megafactories under construction worldwide are, or will be, located in China. Just nine are planned for the United States.
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.

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.