Automakers Pledge to Electrify Transportation, but Will the Batteries Be There?

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Most automakers have committed to shift a portion of their product line to electric vehicles (EVs) over the next five years. But whether EVs will take hold, grow and transform the way Americans drive will be determined largely this year and next, by how many planned EV battery-manufacturing projects move out of the planning room and into the real world, David Pickering, Industrial Info's vice president of research for the Industrial Manufacturing segment, said in an interview.

"By 2025, General Motors Company (NYSE:GM) (Detroit, Michigan) said 40% of its vehicles will be electric," Pickering said. "Volvo is aiming for 50%. Stellantis NV (NYSE:STLA) (Amsterdam, The Netherlands), makers of Chrysler and Dodge vehicles, has committed that 70% of the vehicles it makes will be electric by 2025."

"It gets even steeper after that," he continued. "Ford Motor Company (NYSE:F) (Dearborn, Michigan) has said that by 2030, all of the vehicles it manufacturers will be electric. The same for Honda Motor Company Limited (NYSE:HMC) (Minato City, Tokyo, Japan), Mercedes and Hyundai. That's a lot of EVs, and that means we'll need a lot of batteries."

Late last month, GM announced multibillion-dollar plans to build EV battery factories. For more on that, see January 27, 2022, article - General Motors Takes Major Step in Ramping Up Electric Vehicle Manufacturing.

Pickering spoke about EVs last month on a webcast held by Industrial Info. For more on that, see January 7, 2022, article - IIR Webinar: Global Automotive, Semiconductor Sectors on Track to Easing Supply Issues.

Industrial Info is tracking plans to build approximately 21 lithium ion EV battery-manufacturing facilities in the U.S. over the next few years, with a collective value exceeding $10.6 billion. Nine of those slated factories, valued at about $6.6 billion, are scheduled to kick off construction in 2022. Another three planned manufacturing plants, valued at approximately $3.8 billion, are slated to break ground in 2023.

"If those factories don't start construction according to their current schedules, they won't be operating by the middle of the decade, which is when their output will be needed to power the millions of EVs that carmakers have committed to producing by then," Pickering predicted. "This year and next, it is 'fish or cut bait' time for EV battery manufacturers. Lack of batteries could hamstring the planned transition to electric transportation."

Pickering, who described himself as an "EV realist," asked rhetorically, "How would you like to be an automaker making EVs when there's a high degree of uncertainty about the future supply of batteries?"

"It can be tough to stay grounded when there's all this hype over EVs, when Tesla Incorporated (NASDAQ:TSLA) (Austin, Texas) is one of the few companies on the planet with market capitalization (stock price multiplied by the number of shares of stock) of nearly $1 trillion dollars, more than 10 times the value of GM."

"When you consider all of the EV plans from automakers and policymakers, it's all sunshine and puppy dogs," he said. "If you take a look behind the hype, there's a big disconnect."

Pickering has other concerns about fulfilling the promise of electric transportation, such as the charging network. To date, public EV charging ports are concentrated in California, which has about 39,000 public charging ports, more than the number of ports in New York, Florida and Texas combined. For more on that, see September 30, 2021, article - U.S. Electric Vehicle Market Still Faces Big Challenges, Despite New Investment Announcement.

When it comes to government plans to coordinate the building of a national EV charging network, Pickering said for now, he's in the "show me" mode: "I think we'll have added clarity as 2022 and 2023 unfold, and we see how many planned EV battery factories are actually constructed."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.