Emerging Unrest In The EV Supply Chain

Mike Leslie
May 18, 2024

France has lost control of parts of New Caledonia, the world's third-largest producer of critical nickel, a mineral critical to electric vehicle batteries.

Inputs that matter: Hundreds of French police reinforcements have arrived in New Caledonia amid rioting that has left five people dead in the Pacific Ocean territory.

  • The unrest erupted this week after lawmakers in Paris voted to change electoral rolls to allow more French residents to vote. Indigenous leaders say the move will dilute the political influence of the native people.
  • Hundreds of people have been injured, and about 200 people have been arrested so far.
  • Schools remain shut, and Noumea's airport is closed to commercial aircraft.
  • Under the state of emergency, authorities have imposed a night-time curfew and banned public gatherings, carrying weapons and the sale of alcohol.
  • Many supermarkets are closed, and those that remain open are experiencing shortages because of roadblocks, eyewitnesses say.

The opportunity: The Melanesian Spearhead Group (MSP), a regional group, said on Wednesday: "These events could have been avoided if the French government had listened and not proceeded to press forward with the Constitutional Bill aimed at... changing the distribution of seats in Congress."

  • French Prime Minister Gabriel Attal said 1,000 extra police were joining the 1,700 personnel already there. He said authorities would push for "the harshest penalties for rioters and looters."

Zoom in: On Tuesday, U.S. President Joe Biden announced plans to impose new tariffs on certain products made in China, including a 100% tariff on electric cars.

  • With that, he escalated a policy begun during the Trump administration and marked the decisive rejection of an economic orthodoxy that had dominated American policymaking for nearly half a century.
  • The leaders of both major parties have now turned away from unfettered free trade, a fact that would have been unimaginable less than a decade ago.
  • That thinking guided the trade deals struck during the 1990s and 2000s, including the North American Free Trade Agreement 1994 and the decision to allow China into the World Trade Organization in 2001.

Between the lines: Meanwhile, Chinese President Xi Jinping and Russian President Vladimir Putin doubled down on their alliance against the West this week, accusing the United States and the G7 of trying to block their nations' rise during the Kremlin leader's two-day official visit to China that ended Friday.

  • In the wake of Russia's invasion of Ukraine in 2022, Beijing has repeatedly provided Moscow diplomatic cover from Western condemnation — and an economic lifeline from unprecedented Western sanctions.
  • China has rebuffed U.S.-led charges it is empowering the Russian war machine while benefiting from steep discounts on Russian energy and expanding Chinese exports into Russia.
  • Putin was accompanied by a delegation that included nearly all his senior cabinet members, military officials, and Russian energy, space, and agriculture industry leaders.

Follow the money: "It's safe to say there's no EV being put on the market anywhere in the world that isn't dependent in some way on materials processing and manufacturing that's taking place in China," said Jay Turner, a professor of environmental studies at Wellesley College and the author of Charged: A History of Batteries and Lessons for a Clean Energy Future.

  • The Biden Administration has prioritized building up domestic battery manufacturing and disengaging the U.S. auto sector from Chinese supply chains.
  • Taxing batteries and minerals may be more consequential than the Chinese car tariff in the short term.
  • Ingrid Malmgren, senior policy director at Plug In America, an EV advocacy group, said batteries and raw materials may become more expensive for U.S. battery and car manufacturers.

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  1. https://www.npr.org/2024/05/17/1252069230/russia-putin-xi-china-visit
  2. https://www.reuters.com/world/australians-stranded-new-caledonia-running-out-food-amid-civil-unrest-2024-05-18/
  3. https://fortune.com/asia/2024/05/17/france-lost-control-new-caledonia-producer-critical-ev-metal-nickel/
  4. https://www.bbc.com/news/articles/cyj348wwggzo
  5. https://www.theatlantic.com/ideas/archive/2024/05/tariffs-free-trade-dead/678417/
  6. https://insideevs.com/news/720126/tesla-model-3-tariff-batteries/