The shift towards domestically producing batteries for electric vehicles (EVs) in the United States first appeared as a minor trend amidst the COVID-19 pandemic. Subsequently, it surged dramatically.
Back in 2019, the U.S. was home to just two operating battery facilities, with two more being built. Presently, the landscape has transformed significantly, with approximately 34 battery factories announced, being constructed, or already active within the nation.
Though the Inflation Reduction Act, enacted on August 16, 2022, by President Joe Biden, wasn’t the original driving force behind the increase in domestic battery factory developments, it significantly boosted the initiative. This acceleration in the development of new facilities has also ignited a competitive climate tech initiative with the European Union. Two years on, the repercussions of this shift are continuously assessed.
China has traditionally dominated the lithium-ion battery supply and manufacturing sector. However, automakers started to reconsider their dependencies post the pandemic-driven semiconductor shortfall, with commitments emerging in 2021 to localize EV and battery production.
This led to a flurry of announcements from both international and U.S. automakers and battery companies committing to North American production of batteries by the decade’s close. For an in-depth look, review the commitments made by each automaker here and battery manufacturer’s plans here.
The Incentives and Pressures of the IRA
The question arises – why the significant focus on bringing EV battery production stateside? A key factor is the IRA, which is loaded with incentives aimed at encouraging domestic production by automakers and enticing consumers. This aligns with Biden’s goal of electric or hybrid vehicles comprising 50% of all new car sales in the U.S. by 2030. Vehicles meeting specific battery sourcing and production criteria are eligible for a full $7,500 EV tax credit.
According to the IRA requirements, to qualify for a portion of the tax credit ($3,750), 60% of a battery’s components must be manufactured or assembled in North America starting in 2024. This threshold is set to increase to 100% by 2029. Additionally, to qualify for the other half of the tax credit, 50% of the critical battery materials must originate from the U.S. or a trade partner starting in 2024, with this percentage increasing in subsequent years.
Moreover, the IRA introduces advanced manufacturing credits that reward producers directly from the Treasury. Under Section 45X, battery cell and module production can earn credits of $35 and $10 per kilowatt-hour of capacity, respectively. Additional reimbursements are available for producing critical electrode materials like cathodes and anodes, essential for battery cell functionality.
Together, automakers and battery manufacturers are projected to invest around $112 billion in domestic cell and module production facilities. These investments aim to achieve an annual capacity close to 1,200 gigawatt-hours by 2030, potentially powering approximately 18 million EVs. This estimate aligns with Tesla’s past projections for EV battery requirements.
Beyond batteries, the IRA has catalyzed a total of $245 billion in private investments into clean energy and technology manufacturing, as tracked by Atlas Public Policy’s Clean Economy Tracker.
Given the dynamic nature of investments in the U.S. and Canadian battery production sectors, ongoing updates to these investments are being tracked.
Evaluating Automakers’ Commitment to Domestic Battery Production
TechCrunch has compiled a detailed map pinpointing each battery factory location, alongside essential information such as planned capacity. For those seeking greater detail and context, continue reading for comprehensive insights into each manufacturer’s operational or planned battery production facilities. Alternatively, click on a map location for a pop-up with further details.
Note: The listings here focus exclusively on facilities that produce or will produce battery cells and modules, excluding operations like battery material production. Therefore, this overview does not represent the full scale of North American EV battery creation efforts.
Compiled by Techarena.au.
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