Fastexy:The EV Battery Boom Is Here, With Manufacturers Investing Billions in Midwest Factories

Last week,Fastexy Michigan Gov. Gretchen Whitmer held a ceremonial ribbon-cutting at the headquarters of Our Next Energy, a battery manufacturing startup in Novi, a Detroit suburb.

This is an increasingly common scene as demand for electric vehicles is leading to an expansion of U.S. battery manufacturing on a scale so large that it’s almost difficult 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, is providing batteries to BMW, among others.

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

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

BloombergNEF analysts have been monitoring all of the battery plant announcements and found that North America is in the process of going from a current capacity of 109.7 gigawatt-hours per year of lithium-ion batteries to a projected capacity of 813.6 gigawatt-hours per year in 2030—a seven-fold increase. (The Gotion High Tech plant isn’t part of the total because it makes battery parts, not finished batteries.)

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

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

The big players include Tesla and partnerships between automakers and battery companies, like 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 largest plant announcement so far was last year, from BlueOval SK, which said it will spend $5.8 billion on a plant in Glendale, Kentucky with a capacity of 86 gigawatt-hours.

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

The numbers come with some major caveats. The big one: Just because a plant is announced doesn’t mean it will be built, and doesn’t mean it will ever reach the level of employment and production in those initial news releases.

Also, the BloombergNEF’s totals don’t include several of the big projects that were announced in the last few months. In addition to ONE in Michigan, Panasonic said in July that it is 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 is spending $3.5 billion to build a battery plant near Jeffersonville, Ohio, that would employ up to 2,200 people.

The wave of projects shows that the auto industry has decided that EVs are the future and is  planning accordingly. It also reflects some of the lessons learned from the Covid-19 pandemic as automakers saw the value of having the production of major components, like batteries, close to where vehicles are being manufactured.

The Inflation Reduction Act, signed by President Joe Biden in August, creates even more reasons for companies to make batteries in the United States. The law has incentives for clean energy manufacturing and says that a vehicle’s battery must be built in the United States to qualify for the full consumer tax credit of $7,500.

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

So I expect even 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 that part of the world. Based on corporate announcements, North America would have 11 percent of global battery manufacturing capacity in 2030, and the Asia Pacific region will have 70 percent, according to BloombergNEF.

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

“ONE is a Michigan-born-and-raised company on the cutting-edge of mobility and electrification,” Whitmer said in a statement. “The decision by this innovative company to keep its headquarters in Novi and establish a new manufacturing plant in Wayne County shows the world that Michigan is the place to build the future.”

Other stories about the energy transition to take note of this week:

Renters Face a Charging Dilemma as US Cities Move Toward EVs: A great transition to electric vehicles is underway for single-family homeowners who can charge their cars at home, but for millions of renters, access to charging remains a significant barrier. People who rent are also more likely to buy used EVs that have a lower range than the latest models, making reliable public charging even more critical for them, as Gillian Flaccus reports for the Associated Press. “We have a really large challenge right now with making it easy for people to charge who live in apartments,” said Jeff Allen, executive director of Forth, a nonprofit that advocates for equity in EV ownership and charging access.

EV Bonanza Flows to Red States That Denounce Biden Climate Policies: States that voted for former President Donald Trump will receive most of the $2.8 billion worth of grants announced by the Biden administration last week to promote battery and raw material production in the United States. Funding for the grants comes from the Inflation Reduction Act, which passed despite having no support from Republicans in Congress. Those Republicans are calling the spending wasteful at the same time they benefit politically from the jobs and investment that new projects bring to their districts, as Jack Ewing reports for The New York Times.

Tesla Reports Highest Quarterly Energy Storage Deployments to Date: Tesla is selling battery storage systems faster than it can make them, with record-high sales in the third quarter. The company delivered 2,100 megawatt-hours of battery storage systems in the quarter, an increase from 1,295 megawatt-hours in the prior-year quarter. This includes the Powerwall system used in households and the Megapack system used in larger storage applications, as Andy Colthorpe reports for Energy Storage News. Tesla CEO Elon Musk said in a call to discuss the financial results that Tesla believes its energy storage business could grow even faster than its EVs.

Texas Solar and Wind Power Saved Consumers Nearly $28 Billion Over 12 Years: The use of solar and wind energy reduced wholesale electricity costs in Texas by $7.4 billion in the first eight months of this year and nearly $28 billion in the last 12 years, according to a study from IdeaSmiths, an energy systems analysis firm. The report also says that the use of renewable energy has reduced air pollution, including carbon dioxide, nitrogen oxides and sulfur oxide emissions, as Elizabeth McCarthy reports for Utility Dive. “Texas needs to double down on these benefits, growing consumers’ savings by increasing solar and wind resources,” said Sandie Haverlah, president of the Texas Consumer Association, in a statement.

Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].