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High salaries in the United States have been a hindrance to the development of local battery production
05.04.2021 [12:15],
Alexey Razin

Recently announced plans by the US government to invest $ 174 billion in the development of electric vehicles and infrastructure may encounter a lack of enthusiasm from foreign manufacturers. The wages of local workers are three to four times higher than in Eastern Europe, so it will not always be profitable to launch the production of the same batteries in the United States.

Image source: Tesla

As already noted, the production of lithium batteries in its cost structure is a compromise between the costs of transporting raw materials, its extraction and processing, as well as the delivery of finished products. Ready-made battery cells weigh quite a lot, and it is quite dangerous to transport them over long distances, therefore many battery production facilities are located not so far from sources of raw materials, or the first phase of logistics simply excludes the use of air transport.

The US authorities intend to transfer to electric traction at least 50 thousand cars from the government fleet, as well as up to twenty percent of school buses. Even without these initiatives, the local market for electric vehicles is one of the largest in the world, but it is not so easy to attract manufacturers of traction batteries to the country. Chinese companies fear US sanctions, South Korean LG Energy Solution and SK Innovation have now launched a «patent war» that threatens the last complete loss of access to the US market in several years. Panasonic and AESC manufacturing plants in the US are focused on serving specific customers — Tesla in the first case and Nissan Motor in the second.

Last July, Business Korea explains that governments in the United States, Canada and Mexico reached an agreement defining a minimum wage in the automotive industry. In the United States, it was $ 16 per hour, and workers with this level of pay should be at least 30% of the production staff. By 2023, the share of such employees in the assembly of passenger cars should be increased to 40%, in the assembly of pickups — to 45%. Even when compared with Eastern Europe, not to mention Asia, the wages of workers in the United States are three or four times higher. Last October, a US university graduate could count on an average wage of $ 3,345 a month, while his Polish colleague could only count on $ 1,000 a month, and a Hungarian one even less — $ 747.

Against this background, Panasonic and Samsung SDI are in no hurry to invest in the production of traction batteries in the United States, although the first of the companies has a joint production with Tesla in Nevada. The pay gap may temporarily constrain the expansion of battery production in the United States.

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