The Tesla Era is Over. Lithium is Also Being Locked in By Old Cars

With US angst over China, General Motors is building a domestic supply chain to secure raw materials for electric cars.

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Here's today's take on subsidy mining

Musk's assiduous pursuit of subsidies has been lauded as one of his most backhanded compliments. While Old Auto is falling behind Tesla Inc. and its electric vehicles, he is keeping up with them on that front, too. GM has signed an agreement to invest $650 million in Lithium Americas Corp., which is developing Thacker Pass in Nevada, the country's largest near-term lithium project.

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Detroit is experiencing an abrupt transition from decades of outsourcing and spinoffs to Henry Ford-style vertical integration. In general, splurging on suppliers is not a very capital-efficient investment. When you don't have anything to work with, you can't be efficient at all. Over the years, lithium production has faced an investment deficit, and concerns about it have only increased as EV ambitions have grown. With the final approval of Thacker Pass, GM will be able to produce 1 million EVs a year of lithium, GM says.

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It is also important to note that GM will have received more clean-tech subsidies under the Inflation Reduction Act. Additionally, Uncle Sam is insourcing manufacturing and supply chains with the IRA. For EVs to qualify for the $7,500 federal subsidy, batteries must contain an increasing percentage of US-sourced components and minerals. The value chain also includes grants for battery cells and modules made in America, as well as grants for mining and refining the metals used in manufacturing them.

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Thus, GM plays a vital role in making sure Lithium Americas can start producing its products later this decade. As a result, it builds an IRA at home, which is, after all, what the IRA was meant to do, in part because of the country's China-related angst.

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GM will need every dollar available to meet its targets owing to the burgeoning price war in EVs, which Musk has launched in an effort to reap more IRA subsidies.

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A TradeAlgo estimate showed that the US nuclear fleet was fully profitable last year. Between 2010 and 2020, more than half of plants ran into the red as a result of cheap shale gas, rising renewables penetration, and flat demand for power. Several extreme weather events and a jump in natural gas prices have since increased the price of electricity, and nuclear margins as well. As a result of the early closure of 13 reactors in the 2010s, as well as decarbonization efforts, atomic power once again has the support of the political community.

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As of December 31, TotalEnergies SE had $3.1 billion invested in Adani Group companies, a fraction of the company's global investments. Total and Adani have partnered on gas and renewable energy projects since Adani was accused of stock manipulation and accounting fraud, which has cost it over $100 billion in market value.

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A long run of declines in global food prices has come to an end, bucking the surge in supermarket prices that are squeezing families. Crop flows were disrupted by Russia's invasion of Ukraine in March, causing prices to fall 18%.

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A recovering economy and measures to revive the property market are expected to boost demand for steel in China, which is set for a brighter year for the mills. In the last three months, Shanghai steel futures have increased by 26%.

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Due to curbs on exports, Russia plans to nearly triple its foreign currency sales through early March. US-led coalition has imposed a price cap on Russia's key oil export blend, resulting in deep discounts.

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The Best Out of the Rest

• FT investigates whether the EU is able to match US green subsidies, the biggest question in trade? The FT says the economic model of the EU is at risk.

• Renewable energy investments in emerging markets are under pressure from multilateral development banks. Brad Handler of the Colorado School of Mines' Payne Institute speaks with Chris Nelder about the challenges of getting utility-scale financing in his latest Energy Transition Show podcast.

• As six states face off over how to share the Colorado River, California's water strategy is examined in the Los Angeles Times.
• An energy-visualization firm in Houston has compiled a monthly index for the cost of heating a US home and powering a car. To demonstrate just how unusual 2022 has been, they put together some neat charts.