Canary Media | Julian Spector, January 7, 2025
When President Joe Biden took office, the U.S. was still highly dependent on Asia to manufacture the key building blocks of a lower-carbon economy. Now, after four years of targeted industrial policy, the U.S. is producing record amounts of solar panels and batteries.
Back in 2021, solar was the fastest-growing new source of electricity production, and grid battery installations were rising quickly to turn intermittent renewables into on-demand power. Electric vehicles kept growing their share of new car sales, and the leading market of California even moved to ban sales of new gas-powered cars after 2035.
But the U.S. lacked the ability to supply itself with the crucial equipment that was reshaping and decarbonizing its economy. More than a decade of solar tariffs, under Democratic and Republican presidencies, helped sustain a handful of domestic manufacturers but failed to ignite an industrial resurgence. Battery production happened largely in China, with just a few American gigafactories supplying the grid and electric vehicles.
This left America’s clean energy transition vulnerable to logistical disruptions or geopolitical tensions. And it meant the shift to clean energy would entail sending more money offshore instead of supporting American factory workers.
Facing that dilemma, the Biden administration largely kept and even strengthened Donald Trump’s tariff regime for Chinese clean energy products. Crucially, it complemented tariffs with the Bipartisan Infrastructure Law and the Inflation Reduction Act, which created tens of billions of dollars of grants and loans to shore up U.S. supply chains, plus a medley of clean energy tax credits to encourage domestic production. Though Trump said on the campaign trail that he would repeal Biden’s climate policies — while contending that he wants to boost American manufacturing — industry experts expect the bulk of the clean energy manufacturing incentives to survive.
With Biden set to exit the White House in a few weeks, China still rules global clean energy supply chains, but the U.S. has made measurable progress toward a more modest goal: assembling enough batteries and solar panels to fulfill its own needs. However, true self-sufficiency remains far away — and despite the cautious optimism of industry analysts, the incoming Trump administration creates more uncertainty around the trajectory of clean energy manufacturing than a second Biden term would have.
Solar panels: Now made in America
The solar manufacturing story has a clear takeaway: In a rapid turnaround, the U.S. transformed from import-dependent to almost self-sufficient in producing the finished photovoltaic panels that turn sunlight into electricity.
The U.S. was on track to install 40.5 gigawatts of solar generation during 2024, per a December analysis by research firm Wood Mackenzie. Manufacturers had built nearly 40 gigawatts of domestic solar panel production capacity as of that report’s publication; 9.3 gigawatts of that came online in the third quarter alone. Solar panel manufacturing capacity has nearly quintupled since 2022, the year that the Inflation Reduction Act created tax incentives for domestic fabrication.
This lightning-fast turnaround belies a lingering challenge: The U.S. makes very little of the solar cells that go into the finished panels (which are also called modules, in the industry parlance). And it’s way behind on the steps that precede cell production: forming silicon ingots and slicing them into wafers. These heavy-duty industrial processes are more costly to build and generate more complicated environmental impacts than the relatively straightforward assembly of modules.
There have been a few recent successes further up the supply chain. Recently bankrupt Suniva got its affairs in order to restart cell production in Georgia in November. Qcells, which currently operates the country’s biggest solar panel factory, in northwest Georgia, finalized a $1.45 billion loan with the Department of Energy just before Christmas. That loan will fund the ongoing construction of a multifaceted compound in Cartersville, Georgia, that will produce silicon ingots and wafers, photovoltaic cells, and 3.3 gigawatts of modules annually.
Overall, though, less than 10 gigawatts of solar cell capacity is under construction, enough to supply just one-quarter of the nation’s current solar panel manufacturing capacity.
The U.S. solar factory base heading into 2025 thus testifies to how decisively the rapidly growing industry can respond to targeted industrial policy. But it also reveals the drudgery involved in going beyond end products to truly onshore a whole high-tech supply chain.
Batteries on the way to widespread U.S. production within a few years
The battery market is more complicated than solar — batteries come in more flavors and serve many purposes, like propelling vehicles along roads and storing electricity for homes and the grid. But the overall progress in battery cell production strongly resembles the dynamics in solar: Factories to assemble batteries are growing swiftly to intersect with demand, while the complex material inputs remain heavily dependent on imports.
The Department of Energy’s Argonne National Laboratory tracks private investment in U.S. battery factories, “based on press releases, financial disclosures, and news articles,” and published a progress report last March. Companies had announced investments of $120 billion for battery cell production since 2000, researchers found; $95 billion of that (about 80 percent) was announced in 2022 and 2023, after passage of the infrastructure law.
“The amount of manufacturing production for batteries in particular that’s been planned in the United States has grown tremendously,” lead author David Gohlke told Canary Media this week.
U.S. lithium-ion battery cell production is still smaller than the legacy lead-acid battery industry, but growing fast. Argonne modeled that this capacity hit 74 gigawatt-hours in 2023 and will grow to 1,133 gigawatt-hours in 2030, based on currently expected factory construction.
Factory capacity differs from actual utilization, however. Newly built gigafactories undergo laborious calibration and testing before they can produce at full bore while hitting stringent quality parameters.
So, how does this production capacity compare with America’s increasingly insatiable appetite for batteries? Argonne’s models show that the U.S. economy needed 100 gigawatt-hours of rechargeable batteries in 2023, and that figure will grow to 1,080 gigawatt-hours by 2030. Electric vehicle production gobbles up about 92 percent of that battery capacity, with stationary grid storage taking the remainder; the demand is like a slice of cake, almost all vehicles with grid storage icing on top.
In practice, the U.S. doesn’t need to produce every gigawatt-hour of this total battery demand itself. Some American EV factories build cars with imported battery cells; likewise, some cars packed with U.S.-made cells get exported to other countries, showing up in their total battery demand. Some of the total EV demand is met by entirely imported cars. The policy goal advanced in the two landmark Biden laws is to increase the portion of U.S. battery consumption that’s supplied domestically.
The Argonne report suggests that the U.S. today needs more batteries than it can possibly produce even if its factory fleet operates at full tilt. But battery factory capacity will rocket through exponential growth, kicking in hard in 2026 and 2027. By 2030, Argonne models domestic lithium-ion cell production as a bit ahead of demand for that kind of battery.
For this hopeful scenario to come true, of course, companies need to actually build all the factories they’ve promised to build. The Argonne researchers “aim to be rather conservative” in their accounting of expected battery factories, Gohlke said. But the real-world outcome is sure to be a bit more chaotic than planned.
The buildout has already seen some attrition, as automakers shuffle back from their recent confidence that consumers want to buy electric offerings. Some factories have collided with political headwinds, like the U.S. subsidiary of Chinese manufacturer Gotion, whose plan to drop $2 billion into rural northwest Michigan ran into a barrage of anti-China bluster from conservative politicians. European startup Northvolt declared bankruptcy in the fall and shed U.S. manufacturing assets; other aspiring battery startups could run out of cash too.
Then again, successful manufacturers could develop new sites or expand their early footholds, which would push the tally back in the right direction.
The other big caveat here is that producing enough cells to meet domestic demand is not the same thing as achieving self-sufficiency in batteries. All the critical precursor steps — mining, refining, synthesizing the highly tailored materials to make cathodes and anodes — still happen mostly overseas, and China holds the keys.
“This production of battery cells is nominally sufficient to meet the demand for a rapidly electrifying economy,” the Argonne researchers wrote, of the ten-year outlook. “However, looking at the production of the components which go into these batteries, we do observe a shortfall for most of the constituent battery components.”
That’s natural for this early stage of onshoring the battery economy.
“If there’s not a known demand for these battery cells, then you’re not going to get an influx of the companies making components for those cells,” Gohlke explained.
So there’s a logic to building out cell production first, even with imported materials, to create demand for the steps further up in the supply chain.
That first part of the plan is happening, as fast as multi-billion-dollar battery factories can be built; if those factories succeed in making high-quality batteries without costing too much, they could pull in a new wave of supply chain investments. And upstream investment in minerals extraction typically takes longer to build than a battery factory, in any case, Gohlke noted.
It’s been a busy couple of years, but the economic effects of the gigafactory boom are just starting to be felt.
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