On Monday, the US Department of Energy declared a significant increase in domestic production of batteries for electric vehicles. It is providing a loan of $2.5 billion to Ultium Cells, a joint venture between LG Energy Solution and General Motors that will manufacture batteries for the automaker’s upcoming EV lineup. The funds will be used to construct three new battery plants in Lansing, Michigan, in the United States; Ohio’s Lordstown; and Spring Hill, Tennessee—as part of GM’s strategy to produce one million electric vehicles annually by 2025.
The production of batteries in the United States is expected to significantly increase in the coming years. First, shipping was disrupted by the pandemic, showing how fragile global just-in-time supply lines are. Then, the Inflation Reduction Act of 2022 made a tie between the domestic content of an EV’s battery pack in terms of raw materials and final assembly and the potential tax credit for that EV. In order to be eligible for credits of up to $7,500, an increasing proportion of the battery must be domestic each year.
However, neither the battery manufacturers nor their suppliers are likely to have been caught off guard. In a more ambitious infrastructure bill that would have added an additional credit for vehicles produced by unionized workers, a group of lawmakers in 2021 proposed linking EV incentives to local manufacturing. (That bill was never brought up in conversation with Senator Joe Manchin.)
As a result, recent announcements from battery factories have been numerous. Ford announced in September 2021 that it and SK Innovation would establish 11,000 brand-new jobs at three BlueOvalSK battery manufacturing facilities in Tennessee and Kentucky. A month later, Toyota announced spending $3.4 billion on battery production in the United States. On the same day, Stellantis made the announcement that it and LG had formed a joint venture to open a 40 GWh/year battery plant in the United States by 2024.
In July, we learned that Volkswagen was looking for locations in the United States to build 40 GWh-per-year closed-loop battery factories. BMW announced in October that it would invest $700 million in a battery assembly plant in South Carolina, close to where the majority of its SUVs are manufactured. Additionally, Honda and LG entered into a joint venture to construct a 40 GWh/year facility in Ohio, which is home to several of the automaker’s existing manufacturing facilities.
GM has begun a massive effort to electrify its vehicles, supported by a brand-wide new standard battery platform. The batteries, known as Ultium cells, are pouch cells with nickel-cobalt-manganese-aluminum chemistry. New electric vehicles like the BrightDrop Zero 600 delivery van, the Hummer EV, and the Lyriq SUV from Cadillac already use these batteries. However, GM has a lot more EVs coming soon, including an electric Silverado truck and a $30,000 electric Equinox, as well as a range of cheaper EVs made in partnership with Honda that will be available in 2027.
DOE’s Advanced Vehicle Technology Manufacturing program approved the loan. The ATVM program, which began in 2008, was crucial to Tesla’s early success. However, other EV manufacturers that were funded at that time did not fare as well, and the loan program barely made it through the Trump administration. However, under US President Joe Biden, green manufacturing support is a national priority once more.
“DOE is flooring the accelerator to build the electric vehicle supply chain here at home—and that starts with domestic battery manufacturing led by American workers and the unions that support them,” said US Secretary of Energy Jennifer Granholm. “This loan will jumpstart the domestic battery cell production needed to reduce our reliance on other countries to meet increased demand and support President Biden’s goals of widespread EV adoption and cutting carbon pollution produced by gas-powered vehicles.”
