Yahoo Finance U.S. EV Battery Plants to Spark a New Era in E-Mobility
Even as the electric vehicle (EV) market faces a cooling period due to consumer concerns about high prices and inadequate charging infrastructure, the long-term future of mobility clearly leans toward electrification.
To solidify their positions in this burgeoning domain for the long term, automakers worldwide are pouring in billions of dollars to build EV battery-related infrastructure. Despite a dip in EV sales of late, the battery production momentum is not slowing down, reflecting the industry's anticipation of an inevitable electric future.
Historically dominated by China, the global lithium-ion battery supply chain is shifting. To avoid a repeat of the pandemic-induced chip shortage crisis, automakers, in 2021, began pledging to build EVs and batteries domestically. This has led to numerous commitments to produce North American-made batteries by 2030.
The U.S. government has been pivotal in this transition, with the Inflation Reduction Act enforcing stringent eligibility requirements to develop a domestic battery supply chain and reduce reliance on China. EVs with battery components made by foreign adversaries no longer qualify for a tax credit of up to $7,500, accelerating investments in U.S.-based battery production. This legislative push has further accelerated investments in U.S.-based battery production.
Here are some of the most notable domestic battery production investments currently underway in the United States by major automakers like Tesla TSLA, General Motors GM, Ford F, Toyota TM and Stellantis STLA.
While TM, TSLA and STLA carry a Zacks Rank #3 (Hold) each, Ford carries a Zacks Rank of 2 (Buy) now. GM currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Auto Giants Bet on Battery Plants in the United States
Tesla:The pioneer in the EV market continues to expand its battery production capabilities. The company has invested billions into its Nevada factory to build battery cells. Reports earlier this year indicated that Tesla is expanding its battery facility in Sparks, NV, to bring the supply chain for cheaper lithium iron phosphate batteries (LFP) to the United States. Additionally, Tesla plans to expand its Gigafactory Austin to include battery cell testing and the manufacture of cathode and drive units. These moves are part of Tesla's broader strategy to ensure a robust and localized supply chain to support its EV production.
General Motors: This legacy automaker in the United States has embarked on an ambitious plan with four electric vehicle battery plants in various stages of planning, construction and production. In partnership with LG Energy, GM is building three battery cell factories in Michigan, Ohio and Tennessee, with a combined investment of around $7 billion. Production at the Ohio plant began in 2022, while the Tennessee plant successfully shipped its first battery cells to GM in March. The Michigan factory is under construction, with production expected to begin next year. Additionally, GM has teamed up with Samsung SDI to invest over $3 billion in a new battery cell manufacturing plant in the United States, slated to start operations in 2026 with an annual production capacity exceeding 30 gigawatt-hours.
Ford: GM’s crosstown rival is also making significant strides in battery production. Ford is building twin battery plants in central Kentucky and a technologically advanced mega campus in Tennessee. The Kentucky project, with an investment of $5.8 billion, includes two battery plants that are expected to create up to 5,000 jobs. Although one plant's opening has been delayed indefinitely, the other is set to open in 2025. The factory will supply Ford’s North American assembly plants with locally-assembled batteries for powering the next-generation electric Ford and Lincoln vehicles. The Tennessee facility, part of the BlueOval City complex, involves a $5.6 billion investment and is expected to open in 2025. Additionally, Ford's BlueOval Battery Park in Marshall, MI, is under construction and expected to create 1,700 jobs, with a planned capacity of 20 gigawatt-hours annually. The total investment in this plant will be around $2.2 billion.
Toyota: Japan-based auto biggie is investing $13.9 billion in its first-ever North American battery plant, Toyota Battery Manufacturing, North Carolina (TBMNC). Scheduled to begin production in 2025, TBMNC will manufacture batteries for both hybrid and battery electric vehicles, producing 30 gigawatt-hours annually and creating approximately 5,100 new jobs. This plant is central to Toyota's vision for a carbon-neutral future and its goal of achieving carbon neutrality by 2035.
Stellantis: Italian-American automaker Stellantis is spending $6.3 billion on two EV battery factories in Kokomo, IN, in partnership with Samsung SDI. The first factory, expected to start production in 2025, will have a capacity of 23 gigawatt-hours, while the second, starting in 2027, will have a capacity of 34 gigawatt-hours. These projects are anticipated to generate a combined 2,800 jobs, supporting Stellantis' plans to build electric versions of its popular models, including the RAM pickup truck and Dodge muscle car.
Last Word
Despite the current cooling of the EV market, the substantial investments by automakers in U.S. battery production underscore their commitment to an electric future. As automakers and battery manufacturers continue to pour billions into these projects, it lays the foundation for a robust and sustainable EV ecosystem in the United States, positioning the country as a significant player in the global EV landscape.
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