The US Is Building More Manufacturing Factories In Decades Thanks to EVs

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The US auto industry is pouring billions of dollars into building new factories, thanks to new federal laws and increasing demand for electric vehicles. As of November, the combined total for all automaker investments in 2022 is $33 billion, including new car assembly plants and battery manufacturing facilities.

According to the Center for Automotive Research, this total adds to the $37 billion pledged by the company by 2021. Driving this investment is a series of laws passed by Congress last year to tackle climate change and invest in new jobs and manufacturing. At the heart of the law is investment in domestic semiconductor manufacturing and the manufacture of new EVs and batteries, including facilities for processing battery materials such as lithium and graphite.

The biggest movers include Ford, which has several manufacturing projects underway in Kentucky and Tennessee, where it recently began building a BlueOval City facility. In Georgia, Rivian recently committed to building a second factory, and Hyundai revealed plans to invest $5.5 billion to expand their battery and EV production capabilities.

The new facility also shifts production away from traditional production centers such as Michigan and the Great Lakes region. Southern states such as Georgia, Tennessee and Kentucky have invested in engineering colleges and prepared project sites to attract auto companies. These states have benefited from lower energy costs and more land with existing infrastructure, including roads and utilities. As a result, the state is reaping the rewards at a time when automakers are looking for ways to accelerate development.

The battery manufacturing company is also stepping up new factory projects, with many expected to open in the next few years. Currently, countries in Asia produce most of the world’s EV batteries. However, rising transportation costs, combined with supply chain risks associated with overseas suppliers, are leading companies to consider localizing battery production.

The Inflation Reduction Act further accelerated plans to increase domestic battery production. On top of the expected supply chain cost savings, it offers billions of dollars in incentives, including federal tax credits for buyers who purchase domestically produced EVs. As a result, many companies with assembly plants in the US are developing domestic battery capabilities, including Hyundai and Ford, as well as General Motors and Toyota.

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