As the Trump Admin. continues to roil the auto industry with threatened tariffs on the U.S.’s largest trading partners, one of the biggest issues confronting the industry is stranded capital centered on electric-vehicle battery plants being built so automakers can reach EV goals set by the Biden Admin. and the Inflation Reduction Act (IRA), which are likely going by the wayside.
Ten new battery plants are set to go online this year at a time when consumer demand for EVs is slipping, heavy discounting is needed to move inventory, federal subsidies for EV purchases are targeted for scrap by Trump and subsidies for more public charging infrastructure are also teetering amid political opposition to EVs.
Automakers and battery companies including LG Energy Solution, SK On and Panasonic have made massive investments in new battery plants based on IRA-related rules for qualifying consumers for the $7,500 federal tax credit for EVs. South Korean and Japanese battery makers, whose governments have longstanding trade agreements and friendly relations with the U.S., have worked with the U.S. government and automakers for years to build capacity in the U.S., thus reducing dependency on China and creating new jobs in the U.S.
According to Benchmark Mineral Intelligence, these 10 new plants will grow U.S. battery manufacturing capacity to 421.5 GWh annually, a near-doubling of capacity over last year. The number of electrified vehicles that can be produced from that battery production depends on the mix of battery sizes. Based on an AI analysis, if we assume a blend of standard EVs (60 kWh) and some larger models, the capacity could support about 5 million–7 million fully electric vehicles or a much higher number of plug-in hybrid-electric vehicles (PHEVs).
The U.S. sold approximately 1.3 million electric vehicles last year, according to J.D. Power, marking a 7.3% increase from the previous year. This brought EVs to 8.1% of total U.S. auto sales for the year. Anderson Economic Group forecasts 20% penetration of EVs by 2030, which would be 3 million to 3.5 million new EVs per year by 2030, with perhaps another 20% of sales being PHEVs. That is potentially 6 million EVs and PHEVs needing batteries by 2030. But as we have seen, consumers do not buy vehicles based on forecasts. The pace of infrastructure build-out, uncertainty over tax credits, sticker prices and operating costs, and the political atmosphere around EVs will all factor into sales. A push for PHEVs from automakers would certainly help consume the battery capacity.
EV Jobs
Ongoing studies of clean-energy investments in the U.S. by Wellesley College forecast those factories account for some 35,000 new jobs with some estimates forecasting 50,000 jobs-plus. The Department of Energy forecasted 61,000 jobs from new EV battery plants when the IRA was passed.
One such plant is Toyota’s Liberty, NC, plant, which is completed and plans to start producing batteries in April. Toyota worked with Panasonic Energy North America and is investing $14 billion. There are 5,000 new jobs at the Liberty plant, says Toyota. Batteries to be made there are earmarked for EVs, PHEVs and hybrids.
Battery giant SK On is building three facilities – two with Ford in Kentucky and Tennessee and another in Georgia with Hyundai. LG Energy Solution has built two facilities, a plant in Arizona and one in Ohio with Honda. Panasonic has a factory nearing production in Kansas. Samsung SDI and Stellantis are building a battery plant in Indiana, while Envision AESC has one going up in Kentucky and Our Next Energy has a Michigan plant nearing completion.
“We’ve already sunk capital…in battery production and assembly plants all through Ohio, Michigan, Kentucky and Tennessee. And many of those jobs will be at risk if the IRA is repealed,” says Ford CEO Jim Farley in a recent investment conference.
The federal government committed in December to providing StarPlus, the battery venture between Stellantis and Samsung SDI with a $7.54 billion loan for two factories. GM’s Lansing (MI) Grand River plant received a $500 million grant to assist changing the plant over to EV production. But Trump has expressed skepticism about the federal CHIPS and Science Act that made that loans and other incentives for domestic, high-tech production possible.
Democrats who drove the clean-air mandates and target of 50% EV penetration among new vehicles sold by 2030 believed that having such large job-creating investments in red states would insulate the policy from whipsaw changes by Republicans if they regained control of Congress and/or the White House.
U.S. Department of Energy and related government studies (as well as several auto‐industry assessments) have noted that while EVs typically have fewer moving parts than internal-combustion vehicles, the emerging domestic battery manufacturing and upstream raw material processing are more labor-intensive and will lead to a larger supply-chain footprint for job creation. The cumulative effect from 2015 through 2030 was estimated to be more than 500,000 additional jobs when mining, processing and battery manufacturing, pubic-charging infrastructure and other related businesses are factored in, according to the DOE.
No battery plants have announced delays or cancellation due to Trump’s policy proposals or rhetoric. While several industry leaders and union officials have expressed uncertainty and concern over potential cuts to EV tax credits and related subsidies – which, they warn, could disrupt investment plans and risk jobs – all projects are moving forward, at least until the policies laid out in the IRA formally change.
