🔋Battery Factories
🔋Battery Factories
The onslaught of new battery manufacturing capacity developments show automakers are keen on taking advantage of incentives and securing batteries for their new electric vehicle fleets.
If you found this article interesting, click the like button for me! I would greatly appreciate it :)
With the explosion in popularity of electric vehicles (EVs) and the prospect of using batteries for grid storage, the amount of battery manufacturing is going to have to keep up to meet the demand. The White House wants to help on-shore as much of the battery manufacturing capacity as possible, evident by the requirements laid out in the Inflation Reduction Act. The amount of investment into electric vehicle manufacturing has already begun to take off, with large part help from the aggressive government targets. Will US battery manufacturing be able to keep up?
Back in February of last year, I discussed many of the top automakers EV targets and models, and in it I mentioned the various battery manufacturing projects that were announced at the time. Even before the Inflation Reduction Act, there were plenty of factories in the line up. Check out that piece, Enormous Ventures.
Around the world, the most manufacturing capacity is in China and a fair amount in Europe, but eyes are on what the US market can do in the coming decade. This figure while slightly outdated (compared to new Department of Energy data I will use) shows the relative emphasis various countries are placing on battery manufacturing.
Here we look into the existing and planned battery gigafactories located within the US. Electrek has a great graphic that shows most of the planned factories as of October 2022. There are a few factories already up and running, some large and some small. Tesla facilities are well known, but others like LG, Envision, and Im3NY are operational as well. Many of these facilities are in partnership with large automakers to supply electric vehicles. Other plants that have been announced since the graphic came out or may be smaller than the 1GW threshold include, Panasonic (Oklahoma), Ford/CATL (Michigan), Envision/BMW, Hyundai (South Carolina), Zinc8 (flow battery) (New York, American battery factory (Arizona). If I missed one let me know. As you can see companies are very busy and there are more and more coming into planning and development each month.
The location of factories is important to companies for various reasons. Cost and access to capital, labor, tax benefits, transportation routes, and incentives vary state by state. Overall, the US had ~55GWh production capacity as of 2021 and is expected to increase to ~1000GWh by 2030. The majority of the new development is located in the center of the country along the Mississippi river region.
There is battery cell assembly, battery pack assembly and ultimately the vehicle assembly, each requiring a distinct step. The cells are the individual batteries while the packs are the full package ready to be installed in a vehicle.
Each company goes through this process differently. Tesla for example is responsible for pack production and vehicle assembly, but not cell production which is outsourced to other industry leaders in this case Panasonic. Other companies like GM outsource both cell production and pack production. In their case LG Chem does the battery work for them. It is a mixed bag but most automakers tend to take the second approach.
While the Biden administration wants the share of EV sales to be 50% by 2030, Bloomberg NEF estimates it will be 35% by 2040. Either way there is a wave of new EV’s coming in terms of quantity and brand/model selection. There will be a lot more to chose from in future years. EV trends are likely to continue increasing over the next decade, hitting 5.8% in 2022. automakers are keen to take advantage of the trend, Inflation Reduction Act incentives, and secure their battery supply chains.
While I have been a bit skeptical of the government targets and intervention, it is prudent to note the developing trends and understand what is going on in the macro environment. More companies are chasing the federal money and a lot of emphasis has been placed on domestic manufacturing. This outcome is likely to have ramifications beyond just the ability to serve the sale of new EVs for the respective automakers. The storm of new battery factories brings jobs in the US, secures supply chains, distorts market dynamics through government intervention, feeds the inflationary de-globalization trend, and could bring rise to raw material issues. There are pros and cons to each new development and I hope I can bring new insight and we can stay ahead of these new trends together. Until next week,
-Grayson
Leave a like and let me know what you think!
If you haven’t already, follow me at twitter @graysonhoteling and check out my latest posts.
Let someone know about Better Batteries and spread the word!
Socials
Twitter - @graysonhoteling
LinkedIn - Grayson Hoteling
Email - betterbatteries.substack@gmail.com
Archive - https://betterbatteries.substack.com/archive
Subscribe to Better Batteries
Please like and comment to let me know what you think. Join me by signing up below.
Great insight Grayson. Representing an emerging energy storage manufacturer from North America, the landscape is filling up quickly -- and is absolutely necessary given the shift to electric and over-reliance on non-allies for supply.
I disagree with the completeness of this statement. “ Tesla for example is responsible for pack production and vehicle assembly, but not cell production which is outsourced to other industry leaders in this case Panasonic. ”
Tesla makes their own 4680 cells as part of their supply, and plans a large increase of that production under the IRA. Currently expanding Austin, with equipment that was originally going to Berlin.