So if lower labor costs are no longer the attraction, what is? The magnet drawing American automakers to China these days isn’t metaphorical: It is quite literally the Rare Earths magnets and other metals-based components critical to batteries and parts necessary for mass electric vehicle production. Just as we have seen with solar panel and wind turbine producers, China has the metals – and where the metals are, manufacturing will follow.
At present, China accounts for 97 percent of global Rare Earths production, while the U.S. – once the world’s leading Rare Earths supplier – provides less than 1 percent. It’s not that the U.S. lacks Rare Earths reserves: Data from the U.S. Geological Survey shows China holds 36 percent of the world’s Rare Earths reserves, while the U.S. is home to 13 percent. In fact, until mining commenced late last year at California’s Mountain Pass mine, the U.S. had not produced a single gram of Rare Earths since 2002. As metals analyst Jack Lifton puts it, “China didn’t gain a monopoly in the rare earths. The U.S. gave it to them.
Getting back into the game isn’t easy - not when the U.S. ranks dead-last among 25 mining nations, hobbled by a ball-and-chain permitting regime that takes 7 to 10 years to bring a new mine into production.
For American automakers who don’t have 7 to 10 years to wait for American-mined resources, Beijing’s message is unmistakable: If you want access to critical metals, we strongly suggest you set up your manufacturing plants here in China. And don’t forget to bring us your Intellectual Property on a flash-drive.
Indeed, Ford’s move was followed just days later by Honda’s announcement that in response to “rare earths supply concerns” it would expand its China production of hybrid and plug-in electric car components - itself a response to a similar move by Toyota last month to end-run rare earth export quotas by expanding Prius production in China. In a story first broken in the Beijing media, General Motors - beneficiary of a $50 billion infusion from U.S. taxpayers - has joined with General Electric to develop and build electric car charging stations in China, a move book-ended by GM’s September deal to develop a new electric vehicle platform with its Chinese joint venture partner.
Even if the Webb amendment does becomes law, will a few new lines in the U.S. Code stem the flow of U.S. intellectual property into China? Not as long as China holds a near-monopoly on the critical metals needed to make next-gen electric vehicles a global reality - and not so long as America’s deep-set denial about the need to develop its own resources gives companies like Ford little choice but to play by China’s rules.
With apologies to soon-to-be-former Sen. Webb, who at least is focused on the problem - and to Sir Winston Churchill, grammarian - the U.S. can pass all the laws it wants, but we can’t have a resurgent domestic manufacturing base if we lack the materials manufacturing is based upon.
