For its first manufacturing plant, Addionics, Moshiel Biton’s battery technology start-up, has chosen the US over Europe or Asia. This decision allows the Israel-based company to take advantage of the $370bn funding provided by the US government to promote domestic production of electric cars and batteries. Biton states, “With the incentives offered by the US government, it would be a missed opportunity not to establish our manufacturing plant in the US. We have not found any other location with similar incentives.”
The global shift towards electric vehicles has sparked a race among countries to attract top talent and secure investments in battery technology. China has taken the lead in this field, causing concern among traditional automotive powerhouses like Germany, Japan, and the US. Europe’s response has been more uncertain, but the US has already seen significant investments due to the ironically named Inflation Reduction Act. According to data compiled by the Environmental Defense Fund, more than $90bn worth of battery-related projects were announced in the year following the introduction of the act in August 2022, surpassing the total investments made in the previous eight years combined.
This surge in investment highlights “a renaissance in the manufacturing landscape in North America,” says Kendra Blacksher, an analyst at advisory group RSM. Construction spending on new manufacturing plants has doubled over the past year, reaching $190bn by April 2023. Companies like Stellantis, the owner of Jeep, have also announced plans to invest $3.2bn with Korean battery maker Samsung SDI to build a second battery facility in Indiana. Mark Stewart, head of Stellantis operations in North America, explains that the state of Indiana and the city of Kokomo have created an attractive case for locating their sixth gigafactory in Kokomo.
The availability of funds has proven to be too enticing for companies of all sizes to resist. Addionics’ Biton states, “When deciding where to establish a factory, the 50% sponsorship for capital expenditure plays a significant role in the decision-making process. It’s not just about building the factory, taxes, or employees; it’s about creating an ecosystem that attracts companies and benefits everyone involved.”
However, to build a thriving industry for the future, it is crucial to focus not only on manufacturing plants but also on parts-makers. The UK learned this lesson the hard way when it struggled to attract auto investors after losing many of its parts suppliers to lower-cost regions.
Adapting to the changing landscape, major US names like Borg Warner have adopted a flexible approach. Approximately a quarter of their global plants in Michigan are “zebra” factories, producing both electric car parts and conventional engine vehicle components on the same assembly line. This setup allows the company to adjust its supply based on demand and gradually phase out legacy products. Nevertheless, the shift to electric vehicles will still have a significant impact on jobs. Ford’s CEO, Jim Farley, has already stated that assembling electric cars requires 40% fewer workers compared to traditional petrol vehicles. Farley’s warning is further emphasized by the ongoing strike by workers from the United Auto Workers (UAW) union, demanding higher wages and increased protections in light of the electric-led future. In response, GM offered a major concession by placing battery plants under a union deal, putting pressure on Ford and Stellantis to follow suit.
One major risk the US faces is losing cost competitiveness to other global rivals. As a result, some carmakers have decided to scale back their operations in certain segments. Ford’s CEO, Farley, explained that to compete effectively in the small SUV segment, carmakers need a cost structure similar to that of Chinese EV maker BYD. However, adopting a protectionist approach may result in countermeasures from China, which already controls a significant portion of the world’s raw material processing capacity.
Moshiel Biton, CEO of Addionics, acknowledges the challenges ahead. He states, “It’s hard to underestimate the impact of 30 years of battery advancement.” Addionics specializes in developing and manufacturing extremely thin coverings for battery cathodes, which can reduce metal usage by up to 60% and allow for faster recharging time, ultimately leading to lower prices. The implementation of the Inflation Reduction Act remains uncertain, as currently, there are no electric vehicles that meet its stringent criteria, including localization requirements for battery parts. However, the shift towards electric vehicles remains highly political. Last month, former President Donald Trump urged auto workers to vote for him, claiming that the industry’s move towards electric vehicles would result in unemployment and endless inflation.
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
