EV Industry Continues to Emerge Throughout the Battery Belt

Traffic backs up at the San Francisco-Oakland Bay Bridge toll plaza on Aug. 24, 2022. Justin Sullivan/Getty Images

With the Inflation Reduction Act and the Bipartisan Infrastructure Law incentivizing corporations and consumers to invest in the manufacturing and purchase of electric vehicles (EV), its August passage has opened the door for a surge of EV-related industrial plants, many of which cropping up in southern states such as Alabama.

The German-based ADS-TEC, an EV battery technology company, announced on Tuesday that it will be investing $8 million in a charging facility manufacturing plant in Auburn, Alabama.

The announcement follows North and South Carolina, Georgia, and Tennessee, welcoming companies in their states to build EV cars, batteries, and other EV technology.

ADS-TEC will be building a sales, warehousing, and a service and assembly facility that the company said in its press release would be fully functional by 2024 and expected to bring in 180 jobs.

“We’re excited to welcome yet another high-tech German company to Alabama,” Republican Governor Kay Ivey said. “The partnership between German engineering and Alabama manufacturing has brought many innovative products to the North American market. We’re excited to add ADS-TEC Energy’s battery-buffered fast charging stations to that list, serving the quickly growing electric vehicle market.”

In January, the Alabama Department of Economic and Community Affairs released a comprehensive state plan to expand its electric vehicle infrastructure.

“This plan will serve a valuable purpose to guide the state’s efforts to support Alabamians’ choice to adopt electric vehicles by planning for appropriate infrastructure both now and into the future,” Ivey said.

Battery Belt

New facilities are adding to what is being called the “Battery Belt,” an EV and EV component manufacturing corridor running from Michigan to Georgia, largely concentrated in the Midwest and the South.

In North Carolina, Democratic Governor Roy Cooper announced in September that Wolfspeed Inc., a manufacturer of the rare mineral semiconductor silicon carbide, will invest $5 billion over the next eight years to build a facility in Chatham County, North Carolina, on a 445-acre site.

In November, the Tennessee State Funding Board approved one of the largest cash grants in Tennessee history to win an economic development deal with LG Chem Ltd., a company that plans to invest $3.2 billion to develop a cathode materials plant for EV batteries.

In December, Republican Gov. Henry McMaster and Envision Automotive Energy Supply Company—a Japanese electric vehicle battery technology company—announced an $810 million investment in Florence County to build a battery cell plant that McMaster said will create 1,170 jobs while fulfilling a multi-year partnership with the BMW Group.

Later that month, the Nevada-based EV battery startup company Redwood Materials announced its plans for a $3.5 billion recycling, refining, and remanufacturing battery plant in Berkeley County near Charleston, South Carolina.

Also in December, the Hyundai Motor Group (HMG) and SK On—a South Korean renewable energy technology firm—will be investing an estimated $4 billion to $5 billion in a northwestern Georgia county to build a battery manufacturing plant for electric vehicles (EV).

Gigafactory clusters, 2022. Courtesy of the Federal Reserve Bank of Dallas

Gigafactories

According to a study by the Federal Reserve Bank of Dallas (FRBD), the new wave of investment in gigafactories—facilities that produce lithium-ion batteries—exceeds $40 billion.

The United States saw its first rush of investments in lithium-ion battery factories after the Great Recession of 2007–09, FRBD said, partially motivated by the $2.2 billion of funding allocated in the American Recovery and Reinvestment Act of 2009.

Those gigafactories were smaller and sold a small quantity of EVs.

Since the pace of announcements has increased, six new facilities worth more than $5 billion were announced from 2018 to 2020, FRBS said.

More than 15 new facilities, or expansions, have been announced in the United States since the start of 2021.

U.S. capacity is expected to grow more than fivefold from 2021 to 2026, the FRBS said. By 2031, capacity is predicted to expand another 86 percent.

Lithium-Ion Battery Capacity Surge, 2022. Courtesy of the Federal Reserve Bank of Dallas

Sales in 2021 totaled more than 466,000 units, FRBD said, double the amount in 2020.

FRBD said automakers have committed to rapidly expanding EV production in the next ten years, with Ford announcing to spend $50 billion in EV production, while GM announced that it would spend $35 billion through 2025.

A feature of these investments, FRBD said, is the partnerships between automakers like Ford and battery makers like SK Innovations that allow companies to secure demand.

Ford and SK Innovations entered into a $5.8 billion project to build two 43 gigawatt-hour-capacity facilities in Glendale, Kentucky.

The future BlueOval SK Battery Park will supply Ford’s North American assembly plants with locally assembled batteries.

‘Entities of Concern’

In addition to tax incentives for the production and purchasing of EVs, the Inflation Reduction Act of 2022 offers subsidies to defray the cost of producing critical minerals like cobalt for EV batteries and prohibits the use of those minerals and other components “from foreign entities of concern,” FRBD said.

According to a study at Northwestern University that evaluated the social life cycle of cobalt mining within the Democratic Republic of Congo—which, in addition to China, is responsible for most of the mineral supply—cobalt mining has resulted in social strife, violence, physical and mental health issues, and the loss of farmland and homes.

The FRBD said that the critical-mineral portion of the ban on foreign supply takes full effect in 2025.

Miners at a cobalt cleaning site in Lualaba Province, the Democratic Republic of the Congo. Northwestern Now

Idaho Cobalt Belt

Companies are eyeing domestic options like the Idaho Cobalt Belt (ICB) for minerals for EV batteries to reduce their dependence on foreign-sourced cobalt.

The Toronto-based Electra Battery Materials Corporation announced on Dec. 14 that it has acquired a two-square-mile land package that will allow for more exploration of cobalt near the company’s current excavation efforts in the ICB, a close to 40-mile long and eight-mile-wide cobalt deposit in east-central Idaho.

In February, the Biden administration secured domestic lithium and cobalt as critical to economic and national security, and directed federal agencies to prioritize the production of minerals that are essential components of rechargeable batteries, computers, and household appliances.

The administration admitted its dependence on foreign sources poses a national and economic security threat.

In addition to its investments in companies set to mine for the rare earth minerals in states such as California, Nevada, and Texas, the administration said it would update outdated mining laws and regulations “to promote responsible mining under strong social, environmental, and labor standards.”

Claudio Berti, director and state geologist with the Idaho Geological Survey, told The Epoch Times the emphasis on domestically sourced minerals has brought a considerable increase in exploration to the ICB, which has also raised concerns for environmentally sustainable mining practices.

“Though mining is not a clean business, mining in the Western world is a better choice than deferring those operations to countries that have no environmental or social regulation that protects both the environment and the people mining,” he said. “So, there’s a lot of interest in trying to produce cobalt in areas where there is control in both environmental and social justice from the beginning so that operators can guarantee the security of those commodities to the customer in a complete and trusted way.”