Many automakers are looking south for investments in manufacturing EVs. Recently Volkswagen opened a battery engineering lab, investing around $22 million. It is a 32,000-square-foot facility located near its Tennessee plant.
According to a managing director at consulting firm AlixPartners, Arun Kumar, the EV market share will increase globally by 54% by the year 2035. He told to ABC News, “Southern states are definitely aggressive … 46% of vehicle production in the U.S. currently happens in the South. It’s not a surprise to me that more investment is going there. This is just a start. The EV era is real.”
Gil Tal of UC Davis’ Institute of Transportation Studies said southern states are “fighting hard” to be chosen by automakers, offering attractive tax incentives and favorable investment packages. As the Biden administration pushes consumers toward EVs, setting an ambitious target to make half of all new vehicles sold by 2030 electric, Tal, like Kumar, expects automakers to diversify their supply chain.
“Demand is going up for EVs and there will be new regulations that mandate sales of them,” Tal told ABC News. “Battery production is changing and getting better and more efficient. Any company that sells a significant amount of cars in the U.S. will build battery plants here.”
Producing these highly technological batteries within the U.S. solves many of the headaches plaguing automakers in recent years, Kumar argued. Tesla, the No. 1 seller of EVs in the country, produces batteries and electric motors for the Model 3 at its Gigafactory in Sparks, Nevada, which broke ground in June 2014. The site currently produces more batteries in terms of kWh than all other carmakers combined, making it the highest-volume battery plant in the world, according to Tesla.
Mercedes, which said it would go all-electric by the end of the decade, will invest over 40 billion euros into battery electric vehicles between 2022 and 2030. The Bibb County plant joins the company’s global battery production network with factories on three continents.
In September, Ford Motor said it would construct twin battery plants in central Kentucky to power a new lineup of Lincoln and Ford EVs. Another battery campus in Tennessee will focus on next-generation electric F-Series pickups like the F-150 Lightning. The two projects will cost $11.4 billion and create nearly 11,000 new jobs, Ford said. The Dearborn automaker expects 40% to 50% of its global vehicle volume to be fully electric by 2030.