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Automakers spend billions on electric vehicle batteries in the United States.

Dane Hardware (right), Ford Design and Production Engineer, and Mary Fredrick, Ford Battery Test Engineer, measure battery voltage with a digital multimeter at the Ford Battery Test Lab in Allen Park, Michigan.

Ford

As supply chains around the world remain in dire straits, automakers are spending billions to relocate battery cell manufacturing to their countries to meet the expected skyrocketing demand for electric vehicles over the next decade.

Automakers from Detroit to Japan plan to streamline supply chains to lower costs, simplify logistics, and avoid mass disruptions. The global shortage of semiconductor chips underscores the industry’s dependence on overseas parts manufacturers.

Those based or have major operations in the US also hope to appease the Biden administration, which has urged companies to relocate supply chains to the US.

In addition to Tesla, the nation’s leading electric vehicle seller, automakers have been reluctant to invest in battery cell production until recently. Instead, they relied on suppliers mainly based in Asia to create such parts. Many, including Tesla, have or plan to partner with battery cell suppliers like Panasonic and LG Chem to manufacture parts.

“There will be rapid electrification, plus the shortage of Covid-19 semiconductors has really taught us that we must do more than just rely on batteries as a commodity,” said Arun Kumar, managing director of the automotive and industrial practice. at AlixPartners. “From our perspective, you will see this accelerate even more, primarily because localization is becoming an important factor if you really think about mass production of batteries.”

Electric vehicles are powered by rechargeable batteries, which have modules that contain cells. Packages are by far the most important and expensive part of an EV. They can also weigh hundreds to thousands of pounds, making shipping more difficult than small items like small semiconductor chips.

$ 330 billion in electric vehicles

Based on a five-year rolling average of pledged investments, AlixPartners expects companies to invest $ 330 billion over the next five years across the entire electric vehicle supply chain around the world. About a third of that is expected to come from batteries, mainly in China and Europe, as the US struggles to catch up.

That forecast is 65% higher than the $ 200 billion expected from 2018, Kumar said.

“Electrification is happening faster than many thought a few years ago,” he said. “Equipment manufacturers’ plans began to change dramatically.”

The investment is being made to prepare for new demand. While plug-in vehicles, including all-electric and hybrids, are projected to only account for 4% of the US market this year, rapid expansion is expected over the next decade across the world, including the US.

AlixPartners expects that by 2030, about 28% of the world’s cars will be electric vehicles. In the US, LMC Automotive expects that by then, about a third of new car sales in the US will be electric vehicles.

Panasonic, led by Tesla, is the largest battery cell manufacturer in the country, according to an Argonne National Laboratory report for the Energy Efficiency and Renewable Energy Administration of the US Department of Energy. According to the report, the Japanese company supplied batteries for 70.9% of cars sold in the US in 2020.

But others, like LG Chem and SK Innovation, are partnering with automakers and taking their own steps.

“More and more vertical movement”

“With the tens of billions of dollars that most major automakers are investing in the next five to ten years in the transition to electricity, the last thing they want to do is get stuck without the key components they need, be it batteries or chips,” said the chief Sam Abuelsamid, analyst at Guidehouse Insights “In some cases they are increasing their verticality, and in others they are diversifying their supply.”

Monday’s announcement comes after Ford Motor said last month that it is investing more than $ 11.4 billion in US start-ups that will create nearly 11,000 electric vehicle and battery manufacturing jobs, including lithium-ion battery factories in central Kentucky through a joint venture with SK. Innovation.

“Because of Covid, and now the response to semiconductor shortages, our government and companies are looking to go ashore,” said James Lewis, senior vice president of the Center for Strategic and International Studies, which works with automakers. “Car companies in particular don’t want to be trapped again like they were caught in shavings.”

US factories


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