The Supply Chain Matters blog provides another update on ongoing strategic sourcing and operational developments occurring among electric vehicle focused supply and production networks. Included in this update are Tesla, Rivian Automotive and Mercedes Vans, along with recycling technology start-up efforts.
Developments concerning automotive and commercial electric or hybrid powered vehicle producers, and their strategic sourcing and production moves, continue at a rapid pace. According to industry data, five of the six most sold vehicles in July were electric-powered models.
In prior Supply Chain Matters updates, we called reader attention to General Motors efforts to lock-in supply needs up to 2025, battery designer and supplier Panasonic’s announcement for an augmented U.S. production presence, along with other related moves from General Motors, Rivian Automotive, Tesla and Volkswagen.
While some automakers were once hesitant regarding market demand for EV’s, the latest developments concerning accelerated effects of global warming and the Russia and Ukraine conflict’s impact on global energy markets has changed market behavior. On the other hand, the realities of continued constrained supply situation involving required metals, minerals and rare earths, along with the ongoing semiconductor supply constraints add to challenges for supply network planning.
The following are new updates involving key players.
Earlier this month, somewhat related to recent Panasonic announcements, highflyer Tesla indicated it was investigating the development of a battery-grade lithium hydroxide refining facility in Texas. According to reporting from The Wall Street Journal, a Texas site could begin pilot refining operations as early as the fourth quarter of this year., with commercial volume operations by the end of 2024. According to the report, Tesla intends to utilize a more environmentally friendly process for producing the battery friendly raw ore and ship that ore by truck or rail to Tesla’s various other battery manufacturing sites.
Regarding Tesla’s existing Gigafactory battery production facility, business broadcasting network CNBC, citing internal informed resources, indicated the EV auto maker has changed senior leadership for this facility that includes revised productivity and production goals. Hrushikesh “Hrushi” Sager, an internal executive was promoted to lead not only gigafactory operations but operations at the auto maker’s vehicle assembly plant in Fremont, California. Sager, who reportedly will report directly to CEO Musk, will oversee a new cadre of operations managers that are collectively focused on instilling higher monthly production volumes for associated EV power trains and other battery focused units. There are new improvements in the works for the Nevada based facility, including a new wastewater treatment plant, added power generation from the facility’s solar roof. From our Supply Chain Matters lens, having more seasoned operational executives taking charge of both supply network sourcing and production operations is a good move, long overdue.
Rivian Automotive Initiates Key Strategic Partnership with Mercedes
EV auto and commercial van producer Rivian, and Daimler’s Mercedes-Benz Van division, have initiated a memorandum of understanding focused on cooperation for the joint production of electric powered delivery vans.
Subject to securing a final agreement and appropriate regulatory approvals, the companies plan to establish a joint venture manufacturing company with the purpose of investing in and operation of a factory in Europe to produce larger vans.
According to the announcement, the companies envision production-optimized designs on common assembly lines. The aim is to produce two large vans, one based on VAN.EA, the EV architecture of Mercedes Vans, and the other based on the second-generation Rivian Light Van platform. Further options will reportedly be explored in this partnership.
Supply Chain Matters views this development as a significant boost for Rivian’s efforts to scale supply network, production and working capital investment needs. In partnering with Mercedes Vans for Europe market support needs in EV vans, Rivian can accelerate time-to-market and augment global reach while have the ability to share capital needs with a significant player. In addition to the maker’s R1T and R1S branded EV vans, Rivian had designed and is producing the EDV van for the specific needs of Amazon.
EV Battery Circular Supply Networks Gain Interest
New start-ups that are addressing the need for the recycling of key materials from used batteries to supply metal needs for new batteries are garnering increased investment.
The Wall Street Journal recently reported that the recently passed Inflation Reduction Act in the U.S. can spur added interest in battery manufacturing circular networks. The act specifically calls for upwards of $7,500 in consumer tax credits for the purchase of EV vehicles with the provision that critical materials such as lithium, nickel and cobalt must be extracted, processed or recycled in the U.S. or by free-trade agreement partners. However, the challenges of environmental harm that may be created by local or near-shored producers remains an ongoing significant challenge.
Profiled in the report is Ascend Elements, a start-up that is developing an efficient means to turn used lithium-ion batteries into new components. Ascend recently raised $300 million from investors Jaguar Land Rover and battery producer SK Group along with other investors. Reportedly, the funding is split between equity and debt and values that start-up at more than $500 million. Founded in 2015, Ascend currently operates a facility in Georgia, and aims to build another recycling facility in Kentucky.
Others in this area include Li-Cycle Holdings Corp. and Redwood Materials all of whom have been working on establishing recycling partnerships with EV auto makers as well as battery producers.
This will be an area of keen interest in the months to come.
© Copyright 2022, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.