Governments can subsidize and promote EVs all they want, but production is going to run into limited raw materials. From Mike “Mish” Shedlock at mishtalk.com:
Incentives and free money from the Inflation Reduction Act has triggered an investment boom to build more electric vehicles.
The auto industry has earmarked billions of dollars for EV projects resulting in the Biggest Auto-Factory Building Boom in Decades
The U.S. auto industry is entering one of its biggest factory-building booms in years, a surge of spending largely driven by the shift to electric vehicles and new federal subsidies aimed at boosting U.S. battery manufacturing.
The 11-month total adds to the $37 billion in new auto-factory spending committed in 2021, when a number of new projects were revealed in states such as Tennessee, Kentucky and Michigan. The annual figure is up from $9 billion in 2017 and a more than eightfold increase from two decades ago, the center found.
The race by auto makers to populate their lineups with electric vehicles is the biggest factor behind the factory-spending spree. The federal climate package passed in 2022 is likely to further accelerate U.S. investment, earmarking tens of billions of dollars to subsidize EV and battery factory projects, as well as facilities for processing battery materials such as lithium and graphite.
Some foreign-owned car companies are targeting the U.S. for expansions, an offset to weakness in other global markets. Meanwhile, freshly capitalized EV startups, including Rivian Automotive Inc., are building out their manufacturing capabilities.
Rivian, which began building vehicles in Illinois in 2021, has committed to a second factory in Georgia to open in 2026. Hyundai Motor Co. has revealed plans for a $5.5 billion factory complex in the state, as well.
The Inflation Reduction Act further hastened efforts to increase domestic output. It offers billions of dollars in manufacturer incentives for domestic battery production, and limits a federal tax credit for EV buyers to vehicles with batteries and their mineral components sourced in North America or from trade-friendly countries.
In the past year, General Motors Co. opened a new battery factory with LG Energy Solution in Ohio and is developing two more, in Tennessee and Michigan.
Panasonic Holdings Corp. said over the summer that it would build a $4 billion battery factory in De Soto, Kan. Ford, Toyota Motor Corp. and Jeep-owner Stellantis N.V. also have multibillion-dollar battery-factory projects in progress.