U.S. Site Selection Profile: Electric Vehicle Manufacturing

The electric vehicle (EV) industry gained momentum in the United States over the past several years, driven by a combination of government incentives, anticipated consumer demand, and advancements in battery, software, and charging technology. The passage of the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and various state-level policies have supercharged investment in this industry since 2022. Despite several recent announcements indicating a slowing within the market, this appears to be more of a change of growth pace relative to the breakneck growth rate manufacturers were on these past two years and not a decline in the industry overall.

Site Selection Group, a full-service location advisory, economic incentive, and real estate services firm, actively monitors the EV industry’s rapid evolution, advising companies on optimal locations for their manufacturing facilities throughout the EV supply chain. Below, we provide a snapshot of current trends, key site selection drivers, and major announcements that are shaping the EV landscape as of September 2024.

EV industry growth and expansion by state

Since 2015, the electric vehicle industry has seen significant expansion in the United States. Most of this investment has occurred in the past two years ($165.8 billion of invested capital since 2022), largely spurred by federal incentive programs. Despite promotion at a federal level, 10 U.S. states have emerged as the leaders in this revolution. Of the $199 billion in private investment in EV manufacturing since 2015, $168.6 billion was announced in these states. A brief overview and some examples of their EV industry success are provided below. The list of projects is not exhaustive.

Source: Environmental Defense Fund – January 2015 - July 2024

Georgia

Emerging as a southeastern EV powerhouse, Georgia has attracted investments from companies like Rivian, which will manufacture its R2 model in Stanton Springs, and SK Innovation, which manufactures EV batteries in Commerce. Additional investments such as SK ON and Hyundai’s EV battery plant in Bartow County further solidify Georgia’s role in the growing battery supply chain.  

Michigan

A historic hub for the automotive industry, Michigan has embraced EV production, particularly in battery manufacturing. With major investments from companies like Ford, General Motors, LG Energy and Our Next Energy Michigan has transformed into a key player in the EV sector securing its automotive heritage for years to come.

North Carolina

North Carolina has attracted significant investments from companies like VinFast’s EV and battery plant in Chatham County and Toyota's battery manufacturing facility outside Greensboro. Since Toyota's initial announcement that the Greensboro plant would support both battery EV and plug-in hybrid EV production lines, the company has continued to expand its investment.

Tennessee

Home to multiple EV-related facilities, including battery production plants and EV assembly lines, Tennessee continues to attract significant investment, owing to its strategic location and existing automotive manufacturing infrastructure. Markee projects such as Ford and SK Innovation’s BlueOval City in Stanton and GM’s Ultium electric battery plant and EV manufacturing facility in Spring Hill immediately come to mind, but Tennessee has also successfully attracted battery component manufacturers such as 6K Energy’s Plasma Cathode plant.

South Carolina

Home to BMW North America, Volvo, and Mercedes-Benz Vans, South Carolina has been successful in attracting EV and battery investment from companies such as AESC (battery manufacturing), BMW (EV and battery module manufacturing), Redwood Materials (battery recycling) and Volkswagen via its revitalized Scout brand which will manufacture its new all-electric trucks and SUVs in Richland County.

Nevada

Nevada is home to Tesla’s first Gigafactory, one of the largest battery production facilities in the world, and a Redwood Materials battery recycling plant. These major investments, along with the state’s rich mineral resources for battery components, solidify Nevada’s role in the rapidly growing EV industry.

Indiana

With its strong automotive manufacturing heritage, Indiana has attracted significant EV investment, including Stellantis and Samsung SDI’s EV battery plant and GM’s expansion of its Fort Wayne Assembly plant to support electric vehicle production.

Kentucky

Kentucky has secured major investments such as Ford and SK Innovation’s BlueOval SK Battery Park in Glendale and Rivian’s remanufacturing and restoration facility in Shepherdsville.

Ohio

Ohio has attracted substantial investments, including Honda's electric vehicle and battery manufacturing facility in Marysville and a battery plant by LG Energy Solutions near the former GM Lordstown Assembly Plant.

Elsewhere

• California
  Already a leader in EV adoption, California has seen further investments in research and development (R&D) and technology innovation, with companies focused on autonomous driving, next-gen battery technology, and EV manufacturing.
  
  
• Texas
  Known for its business-friendly environment, Texas continues to see growth in EV manufacturing, including the high-profile Tesla Gigafactory near Austin.

Notable recent announcements in EV manufacturing

The list below has examples of notable EV manufacturing announcements and industry investments over the past year. We highlight examples from some states noted above and include other high-profile announcements. Please note that the example incentives information below may not be a comprehensive sum of all support provided by local and state governments and utilities for economic development.

Fiat Chrysler Automobiles - Belvidere, Illinois

Fiat Chrysler Automobiles (FCA) US is investing to reopen a manufacturing facility in Belvidere, Illinois. The project recently received $334.8 million in grant funding through the US Domestic Manufacturing Conversion Grant Program, funded by the Inflation Reduction Act to support the development and operation of a new electric vehicle assembly line. The facility will create 1,450 jobs. Despite announcing a delayed opening in August 2024, the company has confirmed its commitment to reopening the facility. Award of this grant will aid in that effort.

Rivian and Volkswagen Group

Keen to advance its EV system software, Volkswagen (VW) Group has entered into a joint venture with Rivian to create the next-generation “software-defined vehicle" ("SDV") platforms that will be used in both company’s future vehicles. The initial investment is $1 billion with up to $4 billion in additional investment planned. While Rivian is recognized for its cutting-edge SDV platform, VW has struggled by focusing solely on electric vehicles in a market increasingly demanding advanced technology alongside clean drivetrains.

Accelera by Cummins, Daimler, & PACCAR – Memphis Area – Byhalia, Mississippi Plant

Cummins, Daimler, and PACCAR announced a $1.9 billion 21-gigawatt hour (Gwh) electric vehicle battery plant in Marshall County, Mississippi, near Memphis. The plant will employ 2,000 people with an average annual wage of $66,000. The joint venture will produce lithium-iron-phosphate batteries for commercial electric trucks. To attract this project Mississippi issued a $365 million incentive package.

Key drivers for EV site selection

1. Workforce Availability and Skill Alignment

EV manufacturing requires specialized skills in mining, chemicals/refinement, battery manufacturing, battery assembly, software development, and automotive production. Regions with a robust engineering and manufacturing talent pool, as well as technical training programs aligned with EV technologies, are top contenders for these projects. For instance, Michigan’s rich automotive history provides an unmatched workforce pipeline for EV companies manufacturing batteries or finished vehicles, while other states like Nevada and Texas may be better positioned for mineral processing to support battery production. Additionally, when possible, manufacturers have sought to reduce wages by locating in lower cost states such as those in the Southeast. Tangentially, manufacturers have sought to mitigate the impact of unions on these new operations.

2. Utility Availability

EV manufacturing, especially battery production and minerals processing, is highly energy-intensive across its supply chain, requiring substantial electric and water resources. Sites with reliable and affordable energy infrastructure are crucial for EV companies looking to control operational costs and reduce their carbon footprint. States like Georgia, Tennessee, and Texas offer low-cost energy and access to renewable sources, which are particularly attractive for companies focused on sustainability. Minerals processors such as those producing nickel, manganese, lithium, cobalt, zinc, rare earth metals, etc. tend to utilize varying technologies to refine their products from raw materials. Some processes require large amounts of water for cooling or their refinement process (hydrometallurgical) while others may require either large amounts of electricity or natural gas to superheat materials in an effort to separate their bonds (pyrometallurgical). Locations near a river or lake may also be particularly beneficial for the capability to withdraw or discharge large amounts of water from those water bodies or aquifers.

3. Proximity to Supply Chain and Consumer Markets

The ability to access key materials, like lithium, nickel, manganese, cobalt and other battery components is a major factor in site selection. Different operations along the supply chain are sensitive to different logistic drivers. Generally, companies are looking to locate in regions with proximity to both raw materials and critical consumer markets. The southeastern U.S., with its concentration of automotive suppliers and growing consumer base, is a particularly attractive location for EV and battery manufacturers. EV supply chain projects seeking to refine raw materials will favor locations near a seaport, barge port, rail line or the point of origin (if domestic) since raw material logistics costs are far more costly than the less voluminous finished goods logistics cost. States like Georgia and South Carolina provide logistical advantages through easy access to ports and rail making them attractive for users across the entire supply chain up to vehicle production. However, much growth has recently occurred in the traditional automotive manufacturing hub of Michigan and the Midwest where logistical synergies still exist. This is supported by locating minerals and battery suppliers elsewhere. 

4. Government Incentives and Support

Federal, state, and local incentives remain a key factor in determining where EV companies choose to build. The Inflation Reduction Act has significantly boosted the industry through tax credits, grants, and other forms of support for clean energy initiatives. As the 2024 U.S. presidential election approaches, questions remain as to the viability and potential expansion of federal programs. States like Michigan and Georgia have also offered lucrative packages, including tax abatements and workforce development grants, to attract major EV investments. 

Site selection challenges in 2024

While the EV industry’s rapid growth presents many opportunities, it also brings certain challenges in site selection:

Changing Project Demands

Vehicle assembly investment will continue but perhaps will continue to be consolidated in existing plants or those that are now coming online. Continued investment in this sector now seems to be largely focused on the battery supply chain. This is partly due to the need to manufacture more components of each vehicle in the United States (federal incentive requirement) and in an attempt to reduce reliance on foreign supply chains and “conflict minerals.” Each mineral refinement project varies in its demands due to different source raw materials, technologies employed, and project magnitude. These projects are more site and infrastructure dependent (e.g. port adjacent) than reliant on workforce like the larger OEM and battery manufacturers. Workforce skills will also be more in line with mining and chemicals than traditional automotive manufacturing.

Infrastructure Overload

Utility infrastructure may become strained with the surge in industrial activity, increased electric demand as users seek to cut carbon emissions, and limited new infrastructure development. Furthermore, additional industries such as artificial intelligence-focused data centers, are placing a much larger strain on electric and water resources than previously anticipated thus providing stiff competition among EV manufacturers. Companies need to carefully evaluate site utility capacities, reliability, and required improvement timelines before making investment decisions, as upgrading infrastructure can add significant time and cost to projects.