Thursday, November 30, 2023

China responded to the United States by turning off the graphite tap

The trade war between China and the United States is heating up. And, eventually, the electric car will play an important role. Now it is graphite, important to battery production has become a bargaining chip with which China wants to respond to the United States for the ban on the sale of semiconductors.

In recent months, my colleague Juan Carlos López has explained in detail the full trade war waged by the United States, Taiwan, and South Korea against Russia, China, and countries in their same orbit and the results it produced among the greatest manufacturers. in lithography chips and equipment.

In recent days, tensions have been rising. The United States wants to prevent major manufacturers from selling their high-performance equipment to countries such as China and Russia, citing security reasons, in a new package of sanctions that should begin on November 16.

China’s response was quick and loud: the graphite tap is closed. And, with it, the production of electric cars is slowing down.

The electric car is the key

It’s been a few years shivering in the automotive world. The excessive increase in the technological load of vehicles has led to a large increase in prices but, in addition, caused situations of collapse during the microchip crisis in the times after the COVID-19 pandemic.

The situation prompts waiting times to receive new cars, vehicles are delivered without available functions that promise future updates, and the car offer is completely changed, opting for closed packages and keeping customization to a minimum in many companies.

There are no good times in the electric car either. The lower production of the models reduces the possibilities of selling cars at low prices and, with raw materials skyrocketing in recent years, Chinese control of the supply chain has become crucial for its local manufacturers to produce vehicles at lower costs (with other assistance from the Government).

This puts them in an advantageous position. That’s why China is the world’s largest car exporter and Chinese battery manufacturers dominate global production with an iron fist.

So the Chinese Government is targeting a mineral key to making electric cars: graphite. Beginning in December, as stated in CNN Business, in China you must have a mineral export permit if you want to take it abroad. The Asian country dominates its production and processing, so closing the doors will cause, once again, a price increase of batteries and, with them, electric vehicles.

From China they emphasized that this step is not against the export of a specific country but the manufacturers of high purity, high hardness, and high-intensity synthetic graphite and natural flake graphite and their products must seek approval to depart from the products with its primary. buyers in the United States, Japan, and South Korea.

In the automotive industry, graphite is used in engines and brakes but, in the case of electric cars, graphite is the key to the construction of the anode (the electrode found on the negative pole of the battery) of the battery. The use of crystalline graphite is important because it stands out when it comes to electricity management and its ability to keep the anode intact and, therefore, prolong the useful life of the battery.

According to Ivan Lam, senior analyst at Counterpoint Research who was consulted by CNN, graphite prices will rise, even if the tap is completely turned off or its supply is partially interrupted. He warned that the market has already been affected because Russia, before the war in Ukraine, was already one of the biggest suppliers of this mineral.

This decision is key to trying to continue gaining followers for its electric vehicles. The Chinese Government wants this type of car to be a key piece of its economy. For this reason, it continues to buy aid in anticipation of its withdrawal. At the same time, the United States made a war to attract the production of these cars to its land, with extensive economic assistance.

In Europe, we see how some manufacturers have chosen to open factories in North America, while the Chinese electric car, much cheaper than the European one, has destroyed some of its models. Because of this, it has decided to study whether it will implement some kind of tariff against cars that come from China or whose manufacturers benefit from state aid.

World Nation News Desk
World Nation News Desk
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