Battery manufacturers are rushing to develop capacity in the United States to meet demand for electric vehicles while qualifying for billions in federal incentives, according to a new BofA Global Research report.
“So far, 17 new EV battery facilities have been announced, aided by the latest round of Federal incentives in the Inflation Reduction Act,” Bank of America Securities Research Analyst Andrew Obin wrote in the Feb. 22 report.
The facilities have construction starts ranging from 2020 to 2024 and represent planned capital expenditures of almost $52 billion, according to Obin. The Inflation Reduction Act’s Advanced Manufacturing Production Credit “will likely further incentivize EV battery capacity,” he wrote. “The provision is estimated to be worth $31bn over 2022-2031.”
“The first ‘wave’ of orders is likely just starting,” Obin wrote, including for companies such as Ford, General Motors, Toyota, Honda and Tesla. “Based on previous construction schedules for EV battery plants and [semiconductors], we expect companies in our coverage to start to see orders related to capacity additions ~5 quarters after construction starts.”
This year, Obin said he anticipates orders from five EV battery plants and 4 semiconductor plants. “In 2024 we expect to see orders from six EV battery plants and 2 semi plants,” he wrote. “We note that capacity addition has not halted, with two new EV battery plants announced in the last month, so expected orders may continue to rise.”
The federal government has been working to incentivize domestic battery production as the country aims for half of all new passenger vehicle sales to be EVs by 2030. There are billions in purchase incentives available but qualifying depends on where a vehicle was assembled and what percentage of critical minerals used were extracted or processed in the U.S.
DOE established a loan program for EV battery manufacturers last year, and in October selected 20 companies to receive a combined $2.8 billion for projects that expand domestic battery manufacturing and minerals processing. And in December, DOE selected a joint venture between General Motors and LG Energy to receive a $2.5 billion loan to build EV battery plants in Ohio, Tennessee and Michigan.