Chinese companies are pushing deeper into the global EV market. Now the US wants to supercharge production -- on its own terms. They’re aiming to increase production and rely on their own supply chains, keeping China outside looking in. Will it work?
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00:00 An electric car revolution shaped by trade tensions.
00:03 The US is losing ground to China in the global EV race.
00:06 To catch up, it's pouring money into the car industry,
00:09 but only for its closest trading partners.
00:12 Now, the best chance to clean up US auto emissions hinges on car makers building new local supply chains quickly.
00:20 And we begin here in Spartanburg, South Carolina,
00:22 since the early 1990s, home to the largest US production facility for German carmaker BMW.
00:28 It turns out some 1,500 cars daily, and that in the middle of a transformation.
00:33 A $1 billion expansion is preparing the factory for new electric vehicle assembly lines.
00:38 BMW wants half of its car sales to be electric by 2030.
00:43 It's just one of many carmakers announcing big investments across North America.
00:47 Ford, GM, Toyota, and Honda have all pledged billions of dollars on new battery production across the US.
00:53 In Mexico, meanwhile, Volkswagen, Audi, Peugeot, and Fiat have released expansion plans to their factories.
00:59 Tesla, meanwhile, says it's building an entire new facility in Mexico.
01:03 Each of those announcements coming after US President Joe Biden signed the Inflation Reduction Act in summer 2022.
01:09 It's the largest climate legislation in US history,
01:12 offering a staggering $370 billion in subsidies for renewables, energy grid improvements, and mobility.
01:19 Transportation is the biggest source of greenhouse gases in the US,
01:22 accounting for almost a third of all emissions.
01:25 The US transition to electric has slowed, meanwhile.
01:28 Both China and the EU have put more electric cars on their roadways in recent years and at faster rates.
01:35 The IRA now sets ambitious new goals for electric vehicles,
01:38 including that they reach 50% market share in the US by 2030.
01:42 That's compared to only 8% last year.
01:45 The law's central lever is a clean vehicle tax credit of $7,500 for buyers of qualifying new electric vehicles over the next 10 years.
01:54 It's a massive incentive for consumers to buy only those cars that meet the requirements
01:58 and for producers to adhere closely to sourcing rules.
02:01 But more on that in a moment.
02:03 For the North American car industry, the credit is a real boost, and it comes at a significant moment.
02:08 Recently, it's been Chinese companies that have shown more tempo in the EV market.
02:13 Given that it's that signal to the overall EV supply chain here, there is interest, there is excitement.
02:22 So interest, excitement, that means there's investment.
02:25 Alone in the first three months of the new law,
02:28 carmakers invested an estimated $33 billion just in the US.
02:32 That's according to the Center for Automotive Research.
02:34 It's investment that builds on a well-established production chain stretching across North America,
02:39 the groundwork for which was laid some 30 years ago.
02:43 That's when the US, Mexico, and Canada signed the North American Free Trade Agreement,
02:48 the three nations believing that lowering trade barriers would create more prosperity for all of them.
02:53 But opposition to the measure was high.
02:58 Autoworker unions in particular were concerned about foreign products creeping into the supply chain
03:03 and eroding the domestic production base, so they pushed for a sourcing rule.
03:07 Some 62.5% of the total value of the vehicle had to be produced in North America.
03:12 NAFTA essentially created an auto production chain that stretched from one end of the continent to the other
03:16 and turned Mexico into one of the world's automotive heavyweights.
03:22 The Mexican automotive industry is at the same technological level as the international automotive industry.
03:30 In fact, Mexico is the sixth largest automobile producer in the world.
03:35 There are 24 plants assembling cars or components for the major automotive brands in Mexico,
03:42 and all of them are preparing in varying degrees to integrate into production of electric cars.
03:58 The controversy over NAFTA led to further changes, meanwhile.
04:01 US President Donald Trump, a critic of the agreement, renegotiated it in 2020.
04:06 He raised the local sourcing requirements once again, this time to 75% of the car's value.
04:12 Another challenge for automakers, final assembly of all vehicles must take place in North America
04:17 or in another free trade partner of the US.
04:20 And then beginning in 2025, the new law prohibits sourcing components and minerals from China altogether.
04:27 And that's a problem.
04:28 China is the world leader in lithium-ion battery manufacturing,
04:32 accounting for 79% of total production capacity.
04:34 The US pales in comparison, and that's just lithium.
04:38 Finding alternative sources won't be easy.
04:41 The US has some critical mineral deposits as do free trade partners like Canada, Australia and Chile.
04:46 But experts say most nations are still at the earliest stages of extracting and refining,
04:50 and it's a process that's actually quite dirty and complicated.
04:54 So we're not looking at any quick solution for this key element in the whole battery process.
05:05 If we simultaneously insist, we're not going to do business with China.
05:12 Companies are dealing with more than just sourcing problems.
05:15 Retraining entire workforces and finding new workers
05:17 while still meeting IRA timelines is going to be difficult.
05:21 At the BMW plant in Spartanburg, training is a central part of the transition to electric.
05:25 Last year, the carmaker opened a $20 million facility
05:28 for hands-on courses in robotics and electrification.
05:31 The switch from internal combustion engines to electric drives isn't a small change, experts say,
05:36 touching virtually every aspect of the vehicle and production.
05:40 The vehicle is designed differently, it's built differently.
05:43 All the things about how the vehicle is built all the way through the process,
05:48 even handling the different components, what's required in order to handle them.
05:52 So we also have training for our logistics colleagues,
05:55 for everybody that touches a piece of the car that could be impacted
06:00 by the change from internal combustion to high voltage,
06:04 all the way through to the operation of the vehicle, the testing of the vehicle.
06:09 From Japan to India and the U.S.,
06:11 getting workers like these ready in time is a massive challenge.
06:16 For carmakers, the new push by Washington is simply good business.
06:20 North America, a good investment.
06:22 But it's also an example of how the political priorities in one country
06:25 can conflict with broader climate goals.