Plugged-in: EV revolution fuels "battery belt" emergence from the Midwest to the South

As the market for electric vehicles (EVs) continues to grow, auto and battery manufacturers are scaling up to meet demand with manufacturing site interest concentrated in certain U.S. supply chain hot spots. Driven partially by state tax credits and incentives, as well as federal tax incentives from the Inflation Reduction Act of 2022 (IRA) that require funds be used for North American-based manufacturing and material sourcing, states like Georgia, Kentucky, South Carolina and Tennessee are expanding the footprint of the multitier auto industry into the south through the establishment of a new “battery belt.”

Since the IRA became law in 2022, a substantial number of companies across the country have announced plans to build and expand operations for the manufacturing of EV-related materials and components. The "battery belt" is ideal for new development due to a balanced combination of available labor, utilities, land and state-level support, and expands beyond the Midwest-centric region that historically has attracted most auto manufacturing.

EV manufacturing developments across the U.S.

Throughout the "battery belt", established EV companies are tapping into IRA incentives by building their own battery manufacturing plants or establishing partnerships. Toyota, Ford and BMW are a few of the more prominent companies that have announced plans to make such investments in locations near their auto production plants. Industry-wide, the new gigafactories are expected to help meet worldwide demand of upwards of 4,500 gigawatt-hours (GWh) a year by 2030, with an estimated 1,000 GWh production capacity coming from North America. According to the U.S. Department of Energy (DOE), over a dozen new gigafactories are expected to start producing new batteries in the U.S. by 2025 [1]. In support of these large-scale battery plants is the development of a long supply chain including battery manufacturing, testing, research, recycling, charging and servicing.

Battery recycling projects are also on the rise. Earlier this year, the DOE signed off on a $2 billion loan to Redwood Materials Inc., a North American battery recycler who has recycled scrap from the battery cell production of the Tesla and Panasonic Gigafactory [2]. The company is now building a factory in South Carolina. In March 2023, Ascend Elements celebrated the opening of a Georgia-based lithium-ion battery recycling facility, and has recently announced a multi-year supplier agreement valued at up to $5 billion, starting in late 2024. In early June 2023, the DOE also announced more than $192 million in new funding for recycling batteries from consumer products, launching an advanced battery research and development (R&D) consortium, and the continuation of the Lithium-Ion Battery Recycling Prize, which began in 2019. This announcement supports the Biden-Harris Administration’s goal to have EVs make up half of all vehicle sales in America by 2030 and builds on the nearly $3 billion announced to date from President Biden’s Bipartisan Infrastructure Law for EV and battery technologies [3]. Recycling batteries can generate approximately 95% of these metals to be reused in manufacturing new batteries. By 2030, this EV battery manufacturing capacity will support the manufacturing of between 10 million and 13 million all-electric vehicles per year, putting the U.S. in position to be a global EV competitor [4].