Biden's Chinese Battery Tariff Hike Could See US Manufacturers Like Dragonfly Energy Gain Ground

--News Direct--

By Faith Ashmore, Benzinga

While China currently dominates the global market for lithium-ion batteries, accounting for 80-90% of manufacturing, the U.S. is trying to break its dependence on Chinese batteries. In a significant move that will impact the industry, the Biden Administration has announced plans to triple the tariffs on batteries and battery parts imported from China into the United States. Currently set at 7.5%, these tariffs will be raised to 25% in the coming years.

This tariff increase follows the highly publicized Inflation Reduction Act, which was announced in August 2022 and allocated substantial funds to wind, solar and storage tax credits. The goal of this policy was to drive the construction of approximately 30GW/111GWh of energy storage capacity between 2022 and 2030. The implementation of these tax credits is expected to support the long-term growth of the energy storage industry.

According to a fact sheet released by the White House, the tariff rate for lithium-ion batteries used in electric vehicles (EVs) will increase to 25% in 2024. Similarly, the tariff rate for non-EV lithium-ion batteries will also rise to 25% in 2026. In addition to batteries, the tariff rate for battery parts will also be increased to 25% in 2024. Tariffs for natural graphite and permanent magnets, which are essential components in battery production, will also be raised from zero to 25% in 2026. Certain critical minerals used in the manufacturing process will face a tariff increase from zero to 25% in 2024. With this announcement, U.S.-made batteries could become more relevant than ever.

The Future Of Batteries Is Made In America: Dragonfly Energy Leads the Charge

Dragonfly Energy Holdings Corp. (NASDAQ: DFLI) is an established American lithium battery and technology company renowned for its deep-cycle lithium-ion batteries. The company uniquely designs and assembles its batteries in Nevada, distinguishing itself from competitors who predominantly rely on completely imported products. Through strategic research and development efforts, Dragonfly Energy is expanding its expertise beyond battery pack assembly and into full battery cell production in North America. This dedication to domestic production positions them to capitalize on the burgeoning U.S. lithium market.

Dragonfly's strength lies in its innovative, proprietary dry electrode manufacturing process. Independent evaluations, like the one by Sphere Energy, confirm its effectiveness. This cutting-edge approach ensures scalability and cost-efficiency and demonstrates a higher degree of sustainability compared to existing technologies. Specific advantages include the elimination of toxic NMP solvents, reduced factory space requirements, lower energy consumption during production, decreased carbon footprint and cost savings in manufacturing processes. These domestic production costs translate to significant savings compared to traditional overseas products, even before factoring in IRA tax credits and looming tariff hikes. The company's adaptable manufacturing process allows it to cater to diverse markets by offering cost-effective battery solutions for electric vehicles, consumer electronics and energy storage systems, solidifying its position as an industry leader in battery technology. Additionally, Dragonfly Energy licenses this technology, potentially accelerating the adoption of American-made batteries across various sectors.

With President Biden's restrictions on Chinese imports for non-EV batteries not coming into place until 2026, Dragonfly Energy has a significant window to scale cell manufacturing operations, eventually leading to an exclusively American-made product. This aligns with the national agenda of promoting domestic manufacturing and reducing reliance on China, making Dragonfly Energy a pivotal player in the U.S. quest for lithium battery independence.

Featured photo by Joshua Hoehne on Unsplash.

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