The onshoring of battery manufacturing for EVs in the United States has seen significant growth following the COVID-19 pandemic, with a surge in the number of battery factories either planned, under construction, or operational in the country. U.S. President Joe Biden’s Inflation Reduction Act of 2022 has played a key role in accelerating this trend by providing incentives for automakers and consumers to produce batteries domestically and reduce the country’s reliance on China for batteries. This article explores the impact of the IRA on the EV battery production landscape in North America, highlighting the key automakers and battery manufacturers investing in domestic battery production.
IRA Carrots and Sticks
The Inflation Reduction Act offers various incentives for automakers and battery manufacturers to onshore EV battery production in North America. These incentives include tax credits for vehicles that meet certain battery sourcing and production guidelines, as well as advanced manufacturing credits for the production of battery cells and modules. Additionally, the IRA requires a percentage of battery components and critical materials to be sourced from North America or free trade agreement countries to qualify for incentives, with the aim of increasing domestic production capacity and reducing reliance on foreign supply chains.
Automakers Investing in Domestic Battery Production
Leading automakers such as BMW, Ford, General Motors, Honda, Hyundai, Mercedes-Benz, Stellantis, Tesla, Toyota, Volkswagen, and Volvo have announced significant investments in building domestic battery production facilities in the United States. These investments include partnerships with battery manufacturers such as AESC, Gotion, Kore Power, LG Energy Solution, Northvolt, Our Next Energy, Panasonic, and SK Battery America to develop and manufacture batteries for their electric vehicles. These collaborations are expected to increase annual production capacity significantly, supporting the growing demand for EVs in North America.
Battery Manufacturers Building in North America
Battery manufacturers such as AESC, Gotion, Kore Power, LG Energy Solution, Northvolt, Our Next Energy, Panasonic, and SK Battery America are expanding their presence in North America by building new battery production facilities in various states. These facilities will produce a range of battery cells and modules, including lithium-ion, lithium-iron-phosphate, and pouch-type batteries, to cater to the diverse needs of automakers and energy storage systems. The investments and partnerships between automakers and battery manufacturers aim to establish a robust ecosystem for EV battery production in the region, contributing to the growth of the clean energy and technology manufacturing sector.
Conclusion
The onshoring of EV battery production in North America is driven by a combination of government incentives, automaker commitments, and strategic partnerships with battery manufacturers. The Inflation Reduction Act has served as a catalyst for the expansion of domestic battery production, with automakers and battery manufacturers investing billions of dollars to build new facilities and increase production capacity. These investments not only support the transition towards electric vehicles but also contribute to job creation, economic growth, and the development of a sustainable energy infrastructure in the region. As the shift towards electrification continues, the collaboration between automakers and battery manufacturers will play a crucial role in shaping the future of mobility and environmental sustainability in North America.