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Biden’s Ordered Supply Chain Review to Include EV Batteries

President Joe Biden will issue an executive order directing a review of U.S. supply chains with a special focus on key sectors affecting the U.S. auto industry, including high-capacity batteries used in EVs.

by Riley Beggin, The Detroit News / February 24, 2021
President Joe Biden Shutterstock/lev radin

(TNS) — President  Joe Biden  will issue an executive order Wednesday directing a review of U.S. supply chains with a special focus on key sectors affecting the U.S. auto industry, including semiconductor manufacturing, high-capacity batteries used in electric vehicles and rare earth minerals.

The supply chains for these three "critical sets of products" — as well as the supply chain for medical supplies, which struggled with shortages early in the COVID-19 pandemic last year — will be subject to a 100-day review, administration officials told reporters Tuesday evening during a background call.

"We're going to get out of the business of reacting to supply chain crises as they arise and get into the business of getting ahead of future supply chain problems," the officials said. "This (order) is focused on ensuring that American supply chains are resilient, diverse, secure and promote broad-based growth across the country."

The order will also direct agencies to complete sector-specific reviews in defense, public health, communication technology, transportation, energy and food production within one year.

"We're not simply planning to order up reports. We are planning to take actions to close gaps as we identify them," officials said.

The order comes amid a global shortage of semiconductor chips necessary to produce modern vehicles and as the nation's leading automakers pivot to invest more in electric and autonomous vehicles, which will be more reliant on batteries and the minerals needed to make them.

China is both a major competitor and supplier for the U.S. auto industry, which is racing with automakers in Europe and Asia to develop and deploy electric and autonomous vehicle technology.

Bipartisan members of Congress and experts have argued in recent years that the nation's dependence on China for products such as rare earth minerals is a strategic vulnerability that could be weaponized.

The order isn't "singling out any country," officials said. However, several of the supply chains do have direct connections with the Asian superpower. The reviews will include analyses of whether the U.S. is "excessively dependent on a competitor nation."

While overdependence on foreign sources will be a priority for review, "it's not about reshoring all supply chains to America," the officials said. "Resilient supply chains are not the same thing as all products being made in America by American workers, and that is not our intention here."

Other allied countries may be tapped to provide certain products that can't easily be found in the U.S., such as some rare earth minerals.

General Motors Co.Ford Motor Co. and Stellantis NV have all had to cut production because of the global semiconductor supply shortage. Research firm IHS Markit expects the current struggle with chips to hit bottom at the end of March, but the supply is expected to remain tight into the third quarter of the year.

The White House has been discussing potential solutions to the semiconductor chip shortage with automakers and suppliers and has reached out to officials in Taiwan, which is home to the world's largest chip producer.

The supply chain order is unlikely to solve the global chip shortage within the next 100 days, but the officials said it offers lessons for "longer-term solutions." In the meantime, the administration is "actively engaging" with the industry to ensure U.S. automakers get a portion of chips produced globally.

While the officials hope that the executive order will serve as a "mobilizing force" to prompt long-term changes to strengthen the supply chain, the executive branch is limited in how much it can do to implement long-term policy and funding for changes. The administration plans to use government purchases and may consider tariffs or incentives to push changes.

The order follows another executive order late last month aimed at strengthening the existing Buy American law, which requires prioritizing U.S. companies in government purchases with some exceptions.

(c)2021 The Detroit News. Distributed by Tribune Content Agency, LLC.


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