#72 – Inside Our Industry – Automakers are spending billions to produce battery cells for EVs in the U.S.Posted on
Electric vehicles have been on our radar for a few years now. However, as the pace of adoption of EVs is accelerating and investment in battery technology is growing exponentially, the future is closer than ever. We better get ready…
Automakers are spending billions to produce battery cells for EVs in the U.S.
October 19, 2021 | Michael Wayland | cnbc.com
As supply chains remain in distress across the globe, automakers are spending billions to move production of battery cells to their home countries to meet what’s expected to be rapidly growing demand for electric vehicles over the next decade.
Automakers from Detroit to Japan plan to simplify supply chains to lower costs, ease logistics and avoid massive disruptions. A global shortage of semiconductor chips has highlighted the industry’s reliance on overseas manufacturers for the parts.
Those based in or that have large operations in the U.S. are also hoping to appease the Biden administration, which has called for companies to bring supply chains to the U.S.
Other than Tesla, the country’s electric vehicle sales leader, automakers have been reluctant to invest in battery cell production until recently. Instead, they’ve relied on suppliers, largely based in Asia, to build such parts. Many, including Tesla, have or plan to partner with battery cell suppliers such as Panasonic and LG Chem to produce the parts.
Electric vehicles are powered by battery packs that have modules, which hold the cells. The packs are by far the most important and costly part of an EV. They can also weigh hundreds to thousands of pounds, making shipping more difficult than smaller items such as small semiconductor chips.
“Electrification is occurring faster than many were thinking even a few years ago,” said Arun Kumar, a managing director in the automotive and industrial practice at AlixPartners. “The plans OEMs have in place have started to change dramatically.”
The investments are being made in preparation for new demand. While plug-in vehicles, including all-electric and plug-in hybrids, are forecast to only account for 4% of the U.S. market this year, there’s expected to be a rapid adoption globally over the next decade, including the U.S.
AlixPartners expects about 28% of vehicles globally to be EVs by 2030. In the U.S., LMC Automotive expects about a third of new vehicles sales in the U.S. to be EVs by then.
There are 27 battery facilities, including cells and packs, that have been announced or are currently operating in the U.S., according to the Center for Automotive Research.
Separately from the battery plant announcements, iPhone maker Foxconn, which is preparing to produce EVs, on Monday said it plans to produce electric cars and buses for auto brands in China, North America, Europe and other markets.
“This is the wave of the future,” Lewis said. “This is a modernization of our auto industry.”