EV Battery Boom Brings Billions to Midwestern Factories

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Michigan Governor Gretchen Whitmer held a ribbon-cutting ceremony last week at the headquarters of Our Next Energy, a battery manufacturing startup in Novi, a suburb of Detroit.

It’s an increasingly common scene as demand for electric vehicles drives the expansion of battery manufacturing in the United States on a scale so massive it’s almost hard to comprehend.

Our Next Energy, or ONE, plans to spend $1.6 billion on a new plant in Novi that would employ more than 2,000 people. The company, co-founded by a former Ford engineer, notably supplies batteries to BMW.

But that’s not even the biggest battery-related announcement in Michigan this month.

China’s Gotion High Tech said Oct. 5 it would spend $2.3 billion to build a factory that will manufacture some of the components that go into the batteries and employ more than 2,300 people in Big Rapids, central Michigan. .

BloombergNEF analysts have been monitoring all battery plant announcements and found that North America is moving from a current 109.7 gigawatt hours per year of lithium-ion battery capacity to a projected capacity of 813.6 gigawatt hours per year in 2030 – a sevenfold increase. (The Gotion High Tech factory is not part of the total because it manufactures battery parts, not finished batteries.)

This figure of 2030 includes more than two dozen plants. A few of them are already in operation, but most are either under construction or at a pre-construction planning stage.

“We’re seeing a trend towards localizing the battery supply chain (and) we’re seeing automakers becoming battery manufacturers,” said Evelina Stoikou, energy storage analyst for BloombergNEF.

Big players include Tesla and partnerships between automakers and battery manufacturers, such as BlueOval SK, which is owned by Ford and SK On of South Korea, and Ultium Cells, which is owned by General Motors and LG Energy Solutions of South Korea.

The biggest factory announcement to date was made last year by BlueOval SK, which said it would spend $5.8 billion on an 86-capacity factory in Glendale, Kentucky. gigawatt hours.

If all the factories were built, that would be enough battery capacity for more than 13 million electric vehicles per year, based on today’s typical battery size range. But not all of that capacity will be used for electric vehicles, as some of those batteries will end up in battery storage systems and other uses.

The numbers come with some major caveats. Most importantly, just because a factory is announced doesn’t mean it will be built and never reach the level of employment and production indicated in those initial press releases.

Additionally, BloombergNEF’s totals do not include several of the major projects that have been announced in recent months. In addition to ONE in Michigan, Panasonic said in July it was spending $4 billion to build a battery plant in DeSoto, Kansas that would employ up to 4,000 people. And Honda and LG said this month that their battery joint venture was spending $3.5 billion to build a battery plant near Jeffersonville, Ohio that would employ up to 2,200 people.

The flurry of projects shows that the automotive industry has decided that electric vehicles are the future and is planning accordingly. It also reflects some of the lessons learned from the Covid-19 pandemic, as automakers have realized the value of having the production of major components, like batteries, close to where vehicles are made.

The Cut Inflation Act, signed by President Joe Biden in August, creates even more reason for companies to manufacture batteries in the United States. The law provides incentives for clean energy manufacturing and states that a vehicle’s battery must be manufactured in the United States to qualify for the full $7,500 consumption tax credit.

But it’s important to note that almost all of the activity we’ve seen so far is based on plans companies made before they knew the Cut Inflation Act would pass or knew what it would contain.

So I’m still waiting for more announcements.

The growth will help the United States reduce the dominance of China and the Asia-Pacific region in battery manufacturing, but the battery industry is also growing in this part of the world. According to the companies’ announcements, North America would have 11% of the world’s battery manufacturing capacity in 2030, and the Asia-Pacific region would have 70%, according to BloombergNEF.

Back in Michigan, Whitmer was enjoying an economic development success story in the final weeks of a re-election campaign.

“ONE is a Michigan-born and raised company at the forefront of mobility and electrification,” Whitmer said in a statement. “This innovative company’s decision to retain its headquarters in Novi and establish a new manufacturing facility in Wayne County shows the world that Michigan is the perfect place to build the future.”

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