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Goldman Sachs says the West may end dependence on Chinese batteries by 2030

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The United States and Europe can reduce their dependence on China for electric vehicle batteries with more than $160 billion in new capital spending by 2030, Goldman Sachs predicts.

Electric vehicle batteries are one of the primary technologies causing concern across Western capitals Dependence on China. After years of deep government support and Beijing’s desire to reduce its dependence on oil imports, China produces three-quarters of the world’s batteries and also dominates the production of their materials and components.

However, according to a report for clients seen by the Financial Times, investment bank analysts believe that the stark pivot of protectionism in Washington and Brussels, combined with an unprecedented spending spree by non-Chinese companies, has the potential to rid the West of its dependence on Beijing during the years. the next seven.

To have a self-sufficient supply chain, countries competing with China would need to spend $78.2 billion on it. batteries$60.4 billion in components and $13.5 billion in mining lithium, nickel and cobalt, in addition to $12.1 billion in refining those materials, according to the report.

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The bank’s analysts believe demand for off-the-shelf batteries can be met without China within the next three to five years, thanks in large part to large investments in the US by South Korean conglomerates LG and SK, which have been attracted by massive subsidies from US taxpayers. .

Goldman predicts that the market share of Korean battery manufacturers in the US will rise to about 55 percent in three years, from 11 percent in 2021.

passage August’s Inflation Reduction Act It means huge tax benefits and other subsidies to localize battery supply chains and fuel EV uptake. Goldman Sachs predicts that the “average qualifying vehicle in the United States” will receive more than $10,000 in interest from an IRA.

Ross Gregory, partner at electric vehicle consultancy New Electric, said that despite the IRA’s passage and a recent surge in investment in the mega-plant, Goldman’s cost estimates are The time frame looked very low, and the time frame was optimistic Predictions about the impact of battery recycling were unrealistic.

“There is some momentum building, but there is no strong willingness to invest upstream by anyone but the Chinese players. For example, there has been no high-profile Australian green battery mining project developed with any significant foreign investment at all,” he said, adding: “The growth potential of the structure China’s electric vehicle infrastructure during that period will be so massive that it will still outpace Europe and the United States.”

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Reducing China’s dominance in battery materials and components is also seen as a challenge. Chinese groups’ global market share of anodes production capacity is 87 percent, precursors 85 percent and cathodes 77 percent.

Goldman analysts said the dominance could fade due to protectionist policies in Europe and the United States, along with alternative battery chemistries that require fewer critical metals from China, as well as the rise of battery recycling that would cut demand for lithium and nickel.

Goldman said more companies outside of China are developing sodium-ion batteries — an alternative to lithium-based batteries — as well as LFPs, a type of cathode that doesn’t use nickel and cobalt.

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However, the basic economics of electric vehicle battery production in the West stands as a major barrier in separating from China.

“We note that capex per unit implied by the company’s recent announcements in the United States is 78 percent higher than in China . . . and analysts noted that recent labor shortages and wage inflation will make battery production in the United States more expensive.

Environmental risks are also an unresolved challenge for the EV supply chain outside of China. Until now, the world has been happy to rely on China not only to extract minerals, but also to process materials that include highly toxic chemicals and their waste.

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UK regulator to investigate rising mobile phone and broadband prices

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The UK’s telecoms regulator has launched an investigation into whether telecoms companies were upfront with customers about price increases in a contract after complaints of a lack of transparency.

Ofcom will study whether mobile and broadband service providers made customers who signed a deal with the company between March 2021 and June 2022 sufficiently aware of changes to their pricing terms.

As inflation soared as the cost-of-living crisis intensified, telecom groups collapsed audit From the regulator and politicians about whether they acted enough to support struggling families and broke the rules of transparency. UK inflation hit a 41-year high of 11.1 percent in October.

Most operators chose to significantly increase their prices above the rate of inflation earlier this year, which boosted core revenue. For example, BT, Vodafone and EE raised their prices in line with the CPI, plus 3.9 percent.

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Ofcom He said he was concerned that such intra-contract price differences were not “sufficiently prominent or transparent” at the point of sale, as required by the regulator’s rules. If cases of non-compliance are identified, Ofcom may initiate an investigation into said operators.

said Lindsey Fossell, group director of regulator networks and communications.

Ofcom’s latest affordability report, published on Thursday, found that 32 per cent of households had problems paying for phone, broadband, pay TV or broadcast bills – more than double the level of April 2021.

It also found that 17 percent of households are currently cutting back on other spending, such as food and clothing, to afford telecom services — up from 4 percent in June 2021.

Dana Toback, chief executive of Hyperoptic, a broadband provider that chose not to raise its prices above inflation rates this year, said Ofcom’s investigation was “a huge step forward in preventing the consumer from harm caused by higher mid-price contracts”.

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This year’s Hyperoptic survey found that 60 percent of people were unaware that the price of their broadband would increase mid-decade.

“We work hard to make sure that the annual price increase is clearly defined and discussed at each registration or renewal,” said BT, which also owns EE, adding that the company also showed customers how price changes worked in the contract.

“We follow industry best practices, and will participate fully in the Ofcom programme,” she said.

Vodafone did not immediately respond to a request for comment.

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Georgieva of the International Monetary Fund to discuss the economy and Covid with Chinese authorities via Reuters

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© Reuters. International Monetary Fund Managing Director Kristalina Georgieva attends a press conference following a meeting at the Federal Chancellery in Berlin, Germany on November 29, 2022. REUTERS/Michel Tantosi

NEW YORK (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva said on Thursday that she will travel to Beijing next week with heads of other international institutions to discuss China’s economic outlook and COVID-19 policies with the country’s leadership.

“This is the first time, and we hope we can sit down together and discuss the very pressing issues facing China and the world,” Georgieva told the upcoming Reuters conference.

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Dutch minister defends trade relations with China

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A senior Dutch minister has defended the country’s deepening trade ties with China and vowed not to overreact on high-tech exports as the Biden administration pushes its European partners to harden their stance on Beijing.

The Netherlands remains “very positive” about its relationship with China, Micky Adriansens, the economy minister, said, saying Dutch companies operating there are providing a boost to innovation and trade.

As the United States presses its partners to tighten controls on exports of high-end semiconductor equipment to China, it has insisted that the Netherlands and Europe “must have their own strategy.”

“We have to think about this through – what are the risks of doing business with China in terms of certain products and value chains,” she told the Financial Times. “In general, we in the Netherlands are very positive and always have good relations with China. We do a lot of business with China. There are a lot of Dutch companies operating.”

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China accounts for 11 percent of Dutch imports, second only to Germany, and about 5 percent of exports.

The minister said that the relationship “gives a real boost to innovation and trade which is fundamental for Europe. We must cherish that as well.”

The remarks appear to contradict those of US Secretary of State Antony Blinken this week, who said he has seen “growing rapprochement” between the US and its allies on China. Blinken’s comments follow the US decision in October to impose strict export controls aimed at slowing China’s development capacity and preventing it from obtaining advanced semiconductors that could be used for military purposes.

The Netherlands is home to ASML and ASM International, two world-leading manufacturers of chip equipment.

The United States is now trying to persuade the Netherlands and Japan, another big player in the global chip industry, to strike a three-way deal that would further limit China’s access to chip-making tools.

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US sanctions, which prevent companies from sending many US-made products to China, have already hurt Dutch industry. ASMI He said This week they will affect about 40 percent of sales to China, which accounts for 16 percent of the group’s revenue.

Adriaansens declined to comment on the possible time frame in the semiconductor talks, saying it’s “not a simple yes or no,” but a matter of examining many aspects of a very complex production process. “You have to be very clear about which aspect of the production process is the most important issue for China,” she said.

“The Netherlands and Europe should have their own strategy,” she said, when asked about the US talks. At the same time, they needed to be aware of the risks associated with “specific technologies”. She added, “You don’t want to overdo it, but on the other hand, you don’t want to open your doors where safety is the number one issue — it’s a balancing thing.”

She also warned that it may not be possible to prevent China from acquiring advanced technology. “The development cycle is going very fast in China. We must not be naive.”

Adriaansens said the US’s separate actions to provide massive green technology subsidies to local businesses are troubling The Hague.

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The European Union said that a large part of the $369 billion in tax breaks and tax support in the United States Inflation Reduction Act discriminatory and violates global trade rules, and is in talks with Washington.

“The law to reduce inflation has an impact on industry and the economy in the Netherlands and the EU as a whole,” said Adriaansens. Combined with lower energy prices, it would deter investors and hurt European business competitiveness.

The minister added that the West should have a level playing field and “the same set of rules”. I compared it to the upcoming World Cup match with the United States. “We would like to have the same goal size and the same lines on the field in both halves.”

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