Azzet’s Mission Critical is a weekly column that lays out the ebbs and flows around critical minerals supply chains - from production and refinement, to manufacturing and consumer products.
One of United States President Donald Trump’s first executive orders upon entering office was to eliminate the Biden-era’s electric vehicle (EV) policies, which will see a repeal of a US$7,500 tax credit for new EV purchases that was approved by Congress in 2022 as part of a landmark climate law.
It also abolishes a mandate that ensures 50% of all existing car sales in the U.S. will be electric. It also grants exemptions for about a dozen states, including California, to wipe out all sales of combustible engine cars by 2035.
The Trump administration plans to roll back Biden-era Environmental Protection Agency rules to tighten limits on greenhouse gas emissions and other pollution from passenger and commercial vehicles.
It’s reminiscent of policy reversals Trump made during his first term in office when he removed former President Barack Obama’s vehicle emission standards.
But is it too late for these changes to make a difference?
OEMs shift to electric
While these moves may temporarily stifle domestic EV adoption in the U.S., the ship seems to have sailed for battery-powered cars adoption on a global scale.
Automotive market modernisation is already underway. Virtually every automaker within the North American market already investing in gigafactories and upgrading existing assembly lines - often in partnership with tech companies.
Major auto and battery makers such as Stellantis, Honda, BMW and CATL are already spending billions of dollars setting up downstream supply chains to feed into major markets.
US$52 billion alone has already been spent by these companies in North American supply chains between August 2022 and March 2023. This is on the back of Biden’s Inflation Reduction Act, according to the International Energy Agency.
UK, Saudi Arabia partner in major push into critical minerals
Saudi Arabia has announced a major push into critical minerals projects to diversify its reliance on oil. This will help meet the world’s rising demand for EVs and clean energy sources.
A rumoured partnership with the U.K. has already been signed, with other countries lining up to follow suit.
An enormous US$160 billion investment will be spread across various mineral projects, including lithium, nickel, cobalt, and rare earth elements - all vital components of EVs and renewable energy technologies.
Saudi Arabia wants to become a major global supplier of these minerals to stimulate its economy long term. This is as countries around the world look to diversify their supplies from China’s current monopoly over the production and refinement of in-demand materials.
The timing couldn’t be better, as the UK government hopes to reverse shrinking industrial output. It is also hoping to jump on the pivot to new tech and cleaner energy production.
Manufacturing, defence, clean energy and the digital sectors have been highlighted for domestic growth.
It is no wonder that the two nations recently inked a memorandum of understanding with Saudi Arabia. This is to create opportunities for British businesses and attract investment to the U.K.
"Our number one priority is growth," U.K. Industry Minister Sarah Jones told S&P Global.
Jones highlighted the government's commitment to a modern industrial strategy, or 10-year plan, that focuses on these growth-driven sectors.
“In order to support this, we will need a diverse array of critical minerals going forward.”
