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(Bloomberg) -- Come next summer, at a lithium-ion battery factory in Endicott, N.Y., thousands of rechargeable cells should start rolling off a production line.

Run by Imperium3 New York LLC, a consortium of small companies, it will be the only new production facility of its type to open in 2021 in the U.S., delivering batteries to clients in defense, transportation, and other industries.

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With an initial annual output of cells equal to 1 gigawatt-hour—enough to power about 19,000 electric vehicles at the current average pack size—the capacity at Endicott is a fraction of what global rivals will produce. China and Europe will respectively add about 40 and 19 times that volume next year, BlooombergNEF estimates.

For all it represents—energy efficiency, technological advancement, the future of manufacturing—the Imperium3 plant and its projected output also reflect that the U.S. is falling further behind in the battery race.

© Bloomberg Battery manufacturing capacity by factory location, in gigawatt-hours

The global battery market to power EVs and consumer electronics and to store renewable energy on power grids will be worth about $116 billion a year by 2030, BloombergNEF forecasts, up from around $28 billion now. The U.S. is on course to capture only a small piece of that. “I’m dumbfounded,” says Frank Poullas, executive chairman of Magnis Energy Technologies Ltd., one of the Endicott factory’s owners. “There’s so much activity in Europe and in Asia, and then in the U.S. it’s almost nothing.”

American and German automakers dominated the 20th century, pioneering and continually improving the internal-combustion engine. Japan and China, which industrialized later, were left to play catch-up. But now Asia—led by China and South Korea—leads the way in developing cheap, powerful technology for the EV era.

© Bloomberg Maximum battery factory capacity by 2025, in gigawatt-hours  

U.S. industries will suffer if rising battery demand is met only by foreign companies, experts say, and job losses in the already shrinking auto sector will be even greater if cell production is concentrated overseas. “The U.S. could actually lose out on a lot of the economic opportunities, while Europe and Asia start to take control,” says David Deak, an operating partner in Azimuth Capital Management who’s focused on low-carbon energy investments.

There are national security implications, too, for the U.S. and others from a battery supply chain dominated by China, a nation capable of wielding exports as a political tool. By 2025, China will have battery facilities with maximum production capacity of about 1.1 terawatt-hours’ worth of cells a year, almost double the rest of the world combined.

© Bloomberg U.S. battery factories, in gigawatt-hours of capacity

The White House response has so far been inertia, a shift from the U.S. posture after the 2008-09 financial crisis, according to Cathy Zoi, chief executive officer of charging-network operator EVgo Services LLC. As an assistant secretary at the U.S. Department of Energy under President Obama, Zoi was among the officials who distributed public funds to build American battery factories for hybrid vehicles. Stimulating the sector again will help the U.S. auto industry, she says. “There’s a giant opportunity.”

German Chancellor Angela Merkel and other European leaders understand this, and the continent will lead the U.S. in manufacturing capacity beginning next year. The European Union will spend €500 billion ($590 billion), about a third of its seven-year budget, on green technology that’s likely to include batteries.

What’s not clear is whether European battery production will come mainly from satellite factories run by established Asian giants or from homegrown European players.

“Considering the battery represents 40% of the value of an electric car, the difference between those two scenarios is huge,” says Peter Carlsson, CEO of Northvolt AB, which is building a production facility in northern Sweden and planning a second with Volkswagen AG in Germany. Founded by two former Tesla Inc. executives, the company will likely benefit from Europe’s green push. It raised $1.6 billion in debt in July and received $525 million in loan guarantees from Germany in August.

© Bloomberg Nations’ additions to overseas battery production capacity, in gigawatt-hours  

As they build out electric assembly lines, the continent’s automakers want suppliers close by, to prevent disruption, Carlsson says, and “from a political perspective, to secure the jobs of the future.” That’s a reaction to moves by several battery suppliers, including China’s Contemporary Amperex Technology Co., which is building its first overseas plant in Germany.

Chairman Zeng Yuqun says CATL is eyeing expansion in the U.S., but its less-developed network of suppliers is an obstacle. That hasn’t stopped its South Korean rivals: LG Chem is adding capacity in Ohio, and SK Innovation Co., which is also building in Hungary, expects a plant in Commerce, Ga., to begin production in early 2022.

China’s grip extends to almost every component within the battery: It accounts for about 80% of the chemical refining that converts lithium, cobalt, and other raw materials into ingredients, according to Benchmark Mineral Intelligence, an industry adviser. “Other nations, especially China, are consolidating control of the supply chains for the minerals that form the foundation of modern society,” says Senator Lisa Murkowski, the Alaska Republican who chairs the Committee on Energy and Natural Resources. “By ceding that control, we are losing out on jobs and growth. That will only worsen as emerging industries like advanced batteries and electric vehicles take hold.”

Some alliances are being formed to help push China back. Automakers including General Motors Co. and PSA Group have entered into battery-producing joint ventures with vendors from South Korea and Europe. Still, Volkswagen, Daimler AG, and other brands are investing directly in China’s manufacturers to guarantee future supplies.

A degree of caution in the U.S. is understandable. EV adoption is happening at a slower rate— European EV sales have substantially exceeded those of the U.S. in all but two quarters in the past four years. With the pandemic slowing global auto purchases, battery sales are forecast to drop for the first time in three decades. Stimulus programs elsewhere aim to support the rollout of EVs. There’s no such move from the U.S. government, though Democratic presidential nominee Joe Biden has indicated the sector could get a boost if he’s elected.

Some are optimistic that the U.S. eventually will catch up. Incentives to foster local production of components like battery electrodes would spur investment in everything from mines to complex manufacturing, Azimuth’s Deak says. And growing EV production will ultimately require regional supply chains.

“The same thing will happen in the U.S.,” Deak says. “It’ll just take longer and happen a little slower.” 

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TIFFANY: Its Time To End Americas Failed One China Policy

This year gave Main Street America a close-up look at the disastrous, real-life results of more than four decades of failed U.S.-China policy – a policy characterized by constant Chinese deception, rampant human rights abuses, unfair trade practices, widespread espionage, regional bullying and relentless efforts to corrupt international organizations like the World Health Organization and United Nations.

The consequences of our irresponsible – and unfortunately bipartisan – tendency to reflexively kowtow to China’s dictatorship over the years have come into sharp focus since the outbreak of the coronavirus in Wuhan.  American families, employers and workers have faced crushing and unprecedented economic lockdowns, school closures that have harmed our children academically and psychologically, shuttered churches, canceled doctor visits and even brief shortages of toilet paper, hand sanitizer and personal protective equipment.

But the origin of America’s flawed approach to China did not begin behind the “Great Firewall” in a Wuhan lab or wet market nine months ago. The seeds of our misguided “One China Policy” were planted in the 1970s and punctuated by then-President Jimmy Carter’s decision to unilaterally normalize relations with “Red China” and cut off diplomatic ties with America’s long-time friend and ally, Taiwan – without consulting or seeking the approval of Congress.

Lawmakers responded by approving the bipartisan Taiwan Relations Act (TRA), the cornerstone of continued U.S. economic and cultural relations with the island nation. The TRA also authorized the sale of defensive weapons to enable Taiwan’s government to protect its people and their democracy from Communist aggression.  President Reagan built on the TRA in the 1980s with the issuance of the “Six Assurances,” which made clear that the U.S. did not recognize Communist China’s bogus claim to rule Taiwan, rankling the D.C. swamp’s foreign policy establishment (much of which continues to support a dangerous policy of unconditional American appeasement).

Despite the TRA and Reagan’s “Six Assurances,” however, the U.S. still lacks formal ties with Taiwan, inexplicably treating the island’s democratically elected government the same way brutal regimes in North Korea and Iran are treated from a U.S. diplomatic relations standpoint – and in a category worse than that of Cuba’s unelected dictatorship, which President Obama and Vice President Biden recognized in their second term.

The results are in. The so-called “One China Policy” we have pursued for nearly a half-century has failed. It has made the world less safe and less economically secure. It has emboldened and enriched the Chinese Communist Party (CCP), enabling China’s rulers to threaten their neighbors, perpetuate shocking human rights violations against their own citizens and arguably even commit genocide.

It is time for a change.

In recent years, President Trump’s administration has taken bold steps to initiate closer U.S.-Taiwan ties. Trump spoke directly to Taiwan’s president Tsai Ing-Wen by telephone shortly after his election – the first such conversation between heads of state in more than 40 years. Trump also approved a robust arms sale to the island last year and recently dispatched the highest-level U.S. delegation to Taipei in nearly half-a-century. In 2018, the President signed bipartisan legislation lifting decades-old, bureaucratic restrictions on travel between Taiwan and the U.S. by senior officials from both nations, recently signaled an intent to initiate talks on a bilateral free trade agreement with Taiwan and is reportedly preparing another transfer of defensive arms.

This month, I introduced legislation that would end the morally bankrupt and failed “One China Policy,” and call for the resumption of normal diplomatic relations with Taiwan. It also directs the administration to support Taiwan’s participation in international forums and move ahead with negotiations for a U.S.-Taiwan trade agreement.

America doesn’t need a permission slip from the Chinese politburo to talk to its friends and partners around the world. Now is the time for America to stop parroting Beijing’s “One China” fantasy, to stop acquiescing to the CCP’s unreasonable and increasingly belligerent demands, to deepen our friendships with other democratic nations and to pursue free and fair trade pacts with free and fair countries.

 Rep. Tom Tiffany represents Wisconsin’s 7th District in the U.S. House of Representatives

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