The past eight years have brought a dramatic transformation for the electric vehicle (EV) industry. On June 12, 2014, Tesla CEO Elon Musk claimed that “electric car programs (or programs for any vehicle that doesn’t burn hydrocarbons) at the major manufacturers are small to non-existent, constituting an average of far less than 1% of their total vehicle sales.” In hindsight, that marked the turning point. One year later, 2015 was “the year electric vehicles went mainstream,” according to the International Energy Agency, with one million EVs taking to the roads around the world.
Today, EVs have been embraced by the top automakers, with General Motors, Honda, Mercedes-Benz, Stellantis, and Volvo setting dates for their cars to go all-electric. Those commitments have been backed up with $120.1 billion of private investment in the U.S. since 2015, according to a recently released report by the Environmental Defense Fund (EDF).
Of that $120.1 billion, $31.4 billion (26.14%) was directed toward electric passenger vehicles, $9 billion (7.49%) toward electric vans, buses, and trucks; $65.3 billion (54.37%) toward batteries, and $14.4 billion (11.99%) toward component parts. These announcements cover 93 manufacturing projects. Geographically, 86 percent of these projects are located in ten states, with Michigan and Tennessee leading the pack at $16.6 billion each, Georgia trailing close behind at $15.2 billion, and then Nevada at $13 billion. The other states in the top ten include Kentucky, South Carolina, Ohio, North Carolina, Indiana, and Kansas. In total, more than 15 states are expecting to see major investments from the auto industry.
Among the most notable, Ford Motor Company invested $11.4 billion to build two campuses that will propel the company into the future. Ford asserts this will be the “largest ever U.S. investment in electric vehicles at one time by any automotive manufacturer.” They will direct $5.6 billion to the BlueOval City electric vehicle center, a vertically integrated manufacturing ecosystem producing batteries and electric F-Series cars and trucks in Stanton, Tennessee. Covering six square miles, it will be Ford’s biggest factory and be carbon neutral. The automotive leader is spending another $5.8 billion on a battery manufacturing plant called BlueOval SK Battery Park in Glendale, Kentucky, in partnership with SK Innovation.
Michigan-based General Motors is investing $7 billion in four manufacturing plants across the state, including a new battery cell plant in Lansing and an upgraded assembly plant in Orion Township that will produce electric pick-up trucks like the Chevrolet Silverado EV. It amounts to “the single largest investment announcement in GM history,” the company claims.
Such projects will have an immense impact on the nation’s manufacturing capacity. Based on the current announcements, some estimate that starting in 2026, the U.S. will be able to produce enough batteries to power 11.2 million new light-duty vehicles. It will churn out 4.3 million new electric cars and trucks per year.
It is no coincidence that so many more projects have been dreamed up since the end of 2021: much of the total $120.1 billion was spurred by federal legislation. Only $32 billion had been announced before November 2021’s Infrastructure Investment and Jobs Act (IIJA), or the Bipartisan Infrastructure Law.
Following the IIJA’s passage, an additional $37.2 billion in private investments were declared: $5.2 billion more than during the nearly seven years prior and accounting for 30.97% of the total since 2015.
Following August 2022’s Inflation Reduction Act (IRA), $50.8 billion worth of private announcements flooded in, accounting for 42.3% of the total from the last eight years. In total, $88 billion, or 73.27% of the $120.1 billion, has been planned since the IIJA was passed.
Peter Zalzal, associate vice president for clean air strategies at EDF, reflects that “in little more than a year, the historic investments in the Inflation Reduction Act and Bipartisan Infrastructure Law have helped launch an American vehicle manufacturing renaissance.”
It is easy to see why these two pieces of legislation would encourage such large amounts of private investment. The IIJA dedicated more than $100 billion in federal dollars to electric vehicles and clean energy, while the IRA promised an additional $369 billion for climate initiatives that include these sectors.
With regards to light-duty vehicles, the IIJA injects $7.5 billion into the country’s first national network of charging infrastructure, which will amount to 500,000 chargers emphasizing rural and underprivileged communities.
The IRA helps consumers who are hoping to purchase an electric vehicle over the next decade by providing a $7,500 tax credit for new cars and a $4,000 credit to support buying used.
It offers additional incentives to encourage domestic manufacturing. The law delivers $2 billion in Domestic Manufacturing Conversion Grants to help companies convert production lines for this new output. And $3 billion will be doled out to encourage the production of EVs and their components in the country through the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program.
In terms of heavy-duty transportation, the IIJA provides $5 billion in federal spending for zero-emission and low-emission school buses. Meanwhile, the IRA provides $1 billion to state, local, and tribal governments to transition their Class 6 and 7 commercial vehicles to zero-emission models and to build out the associated infrastructure and workforce.
As Scott Keogh, CEO of Scout Motors Inc., explained of his company’s planned $2 billion factory in South Carolina, where the Volkswagen AG subsidiary will build electric trucks and SUVs, “We view it simplistically a little bit like the Gold Rush. There’s never been a better time to build a factory in America.