June 24, 2024
Stories of supply chains…
1: China's EV dominance could "collapse" US subsidies
Summary: South Korea has “warned” the US that China’s dominance in EV battery materials could make it impossible for automakers to qualify for subsidies.
Analysis: Unless battery manufacturers receive an exemption from the FEOC rules allowing them to source graphite from Chinese suppliers, it remains uncertain whether any vehicles will be eligible for the IRA tax credits offered by the Biden administration to EV buyers. Notably, Chinese companies currently control over 99% of the battery-grade graphite market and hold a 69% share in the synthetic graphite market used for battery anodes.
It will be very difficult to build an alternative supply chain, at scale, in such a short time frame.
2: Data centers are slowing the shift to clean energy
Summary: The massive energy used by data centers is causing utility companies to use fossil fuels and coal for longer to try to meet demand, and keep prices within reach for consumers.
Analysis: Electric utilities, tech companies, consumers, and regulators grapple with competing priorities. Utilities focus on ensuring a dependable power supply, tech firms highlight their environmental dedication, consumers voice frustration about rising electricity expenses, and regulators oversee grid investments with sustainability in view.
“Dominion Chief Executive Robert Blue said the utility expects its peak load to increase at least 5% each year for the next 15 years.”
Major tech giants like Alphabet, Microsoft, and Amazon rank among the largest consumers of data centers. Additionally, they have pledged to achieve net-zero emissions globally in the coming decades. This is incompatible with the reality on the ground, and some customers of the tech companies want nothing to do with fossil fuels, which will make
3: Chip factories need workers, LOTS of them
Summary: SK Hynix is building a fabrication plant for chips and needs hundreds of workers to staff it. It is working with Purdue University to meet that need.
Analysis: Talent availability and skills are in short supply in many industries, not just high-tech manufacturing. Currently there are roughly 10 million unfulfilled jobs in the US, with roughly 2 million in manufacturing, and no sign of this easing. This is one of the largest challenges to getting US industry moving forward.
4: The US Energy Department gets power over big projects
Summary: The need to fast-track approvals and get through red tape faster, saving several years of waiting time for approval.
Analysis: Getting approvals and moving quickly has not been a hallmark of government in the US, and in this case, it only applies to projects that cross federal land. One of the greatest challenges, outside of talent, that industry faces, with no clear remedy.
5: $7.5B for 8 EV charging stations
Summary: $7.5B has been spent rolling out EV charging stations, but work is very slow. Regulations around operability, reliability, where stations can go, and the type of certifications for labor are all slowing down the expansion of EV networks.
Analysis: The inefficient rollout is similar to some of the challenges in the Chinese rollout in the late 2010s. Governments moving without consulting industry is a recipe for disaster in these kinds of situations. Look for more of this to happen as money pours into various industries in the US and EU.
Something unique….
Meet the robots cutting your BBQ ribs
Robots are standardizing rib cuts for BBQs, and helping to ease labor shortages. The efficiency gained is more production in a shorter time, and a standardized package for customers.
As labor shortages become more severe in the US and EU, look for more of this to start to occur.