On August 5th, US President Joe Biden put forward a goal of vigorously developing the US electric car industry, which plans to increase the proportion of electric vehicles in the total sales of new cars in the United States to 50% by 2030.

The planned electric vehicles include battery electric vehicles, fuel cells and plug-in hybrid vehicles with gasoline engines. Major automakers, including Ford, General Motors Co and Stellantis, which owns Chrysler, are involved in the program.

Since taking office, many of Biden's executive orders and proposals relate to the industrial development of the United States, and large-scale infrastructure projects reflect the desire to improve the global competitiveness of American manufacturing. Some analysts believe that at a time when the global vehicle electrification process is accelerating, in order to improve competitivenessThe goal put forward by Biden marks that the United States has raised the new energy vehicle industry to the height of national strategy.. "President Biden believes it is time for the United States to lead the manufacturing, infrastructure and innovation of electric cars," the White House said in a press release. "

In fact, Biden announced a $174 billion development support plan for the electric car industry on March 31, 2021. These include a $100 billion discount for consumers to buy cars, a $15 billion charging pile construction, a $45 billion school bus and bus electrification program, and subsidies for new battery plants in the United States. It also provides a subsidy of $14 billion for the conversion of closed car factories into electric vehicle and parts factories.

Barron Weekly believes that achieving these goals requires a lot of expenditure, which will drive the development of related industries and companies and create investment opportunities for investors. In addition, some analysts pointed out that the United States has long urged China to stop supporting key industries through subsidies, government preferential policies and other intervention measures, and now the Biden administration seems to be beginning to follow suit, but it may not be so easy to "copy Chinese homework."

Hundreds of billions of dollars of investment will benefit a number of industries

Barron Weekly points out that there are only about 2 million electric cars on the roads in the United States, and only 2% of the cars sold in 2020 are pure electric vehicles. In the first half of 2021, General Motors Co delivered 1.3 million vehicles in the US market, of which only 20300 were electric vehicles, accounting for only 1.6 per cent.

General Motors Co previously announced plans to invest $35 billion in the development of electric vehicles between 2020 and 2025, of which about $8 billion will be used to produce batteries, and the company will sell 1 million electric vehicles a year in the future.

If it costs $8 billion to produce batteries to sell 1 million electric cars, it would cost $64 billion to sell 8 million electric vehicles, or about 50 per cent of annual US light vehicle sales, by 2030, according to Mr Biden's plan.

In addition to the cost of producing batteries, automakers design and assemble electric cars, and Ford spends about $5 billion to $7 billion a year to maintain and upgrade its car plants with a capacity of between 5 million and 6 million, according to Barron Weekly. By contrast, over the past few years, Tesla, Inc. has spent about $5 billion on new factories with a capacity of 1.5 million electric cars in Shanghai, Germany and Texas, which is roughly equivalent to $3 billion for every 1 million electric cars produced. According to this calculation, Ford will need to spend an additional $22 billion to upgrade its existing plants and increase the production capacity of electric cars.

Then there is the charging infrastructure, which currently has only a few thousand fast charging stations in the United States. Arkady Sosinov, chief executive of FreeWire, a maker of charging equipment with battery backups, says the fastest chargers sell for about $100000 each, excluding installation. If 50, 000 fast charging stations are to be built, 10 billion dollars may be needed.

To achieve the goals set by Biden, this is equivalent to investing nearly $100 billion over the next nine years (only in the United States). There are a lot of industries and companies that will be involved over the years, which is good news for electric car charging companies such as ChargePoint (CHPT) and capital and automation equipment suppliers such as ROK.

Battery makers such as Ningde Times (300750), a Chinese company, will also benefit, spending about $3 billion on capacity over the past 12 months at a time when electric car sales in China are growing rapidly. At present, the world's largest battery manufacturers are non-American companies, mainly in China, South Korea and Japan.

In addition, lithium is needed to produce batteries, so the lithium mining industry must also increase production capacity. In 2020, the global lithium mining capacity is about 400000 tons, enough for the annual production of 2 million to 3 million electric vehicles. If the United States is prepared to increase production to 8 million vehicles a year, coupled with production demand from other countries, the world will need to mine an additional 5 million tons of lithium a year over the next few years, which means a 13-fold increase for the lithium industry as a whole. The growth in demand is good news for mining companies such as Albemarle (ALB), which has about 20 per cent of the global lithium market.

Analysts at brokerage Evercore believe that electric car stocks and electric car battery stocks are expected to rise sharply in the coming weeks. In addition, the US $1.2 trillion infrastructure bill includes funding for electric car charging stations, and the upcoming budget adjustment is expected to include electric vehicle-related incentives, bringing more catalysts to the rally in related stocks.

It is not easy to copy homework in the United States.

After announcing a plan to support the development of the electric car industry in March, Biden stressed the plan in May, saying that the future of the auto industry is electric cars and that the United States should provide car subsidies for "clean cars." Some analysts pointed out that in order to support key industries that are considered to be of strategic significance, the United States has also begun to emphasize "concessions" and "subsidies", which has always been the practice of the United States urging China to stop.

The US Senate voted in July to pass an unprecedented industrial subsidy bill, the most notable of which was the approval of $52 billion for semiconductor manufacturing plants. According to Global Trade Alert, a trade research group, there has been a significant increase in such interventions in the United States over the past decade.

In the context of geopolitical tensions between China and the United States and the disruption of the supply chain caused by the epidemic, the US government's support to the industry is expanding. Some government officials believe that the United States must also adopt government intervention, otherwise it will have to "watch China dominate important industries."

Dr. Doom Roubini, a well-known economist, recently wrote that Biden's economic policies have a strong color of neo-populism, which are actually copies of Trump, and the neo-populist economic policies that sprung up during Trump's term of office were carried forward here by Biden, which is completely different from the neo-liberalism pursued by previous US administrations.

Some analysts believe that this approach is contrary to the proposition advocated by the United States to oppose government intervention in the capital market and pursue a neoliberal economy, and there may be disobedience between soil and water, leading to counterproductive effects. In addition, due to the increasingly serious confrontation between the two parties in the United States, it is also very difficult for some policies to land.

In addition, the Wall Street Journal pointed out that the industrial support policies involved in building a "double cycle" proposed by China in recent years are partly aimed at reducing China's dependence on other countries. for example, the Trump administration banned American companies from providing key technologies to Chinese companies. Even if the US invests as much support money as China does, it may be difficult to build a truly independent supply chain because China dominates many supply chain links.