Is the US Losing the EV Race?
The electric car business in the U.S. certainly looks robust, with every domestic automaker either offering or preparing to offer electric vehicles, and a long list of startups that includes Lordstown (as troubled as it might be), Rivian, Lucid, Bollinger, and others. But a new report is troublingsuggesting only 5% of $345 billion in global EV investment is actually being poured into American assembly plants. The report is from the International Council on Clean Transportation (ICCT), the group that broke the Volkswagen diesel scandal. It says that just seven of the 44 U.S. auto plants will be producing all-electric by 2025. It suggests that, despite the rah-rah rhetoric from domestic automakers, the EV pivot may be stuck in go-slow mode. China is a big player, with an accelerating presence. Through 2020, 44% of global EV production was located there, up from 36% in 2017. The countrys electric car manufacturers number in the hundreds, though quality varies widely. Europe is the other big growth area, accounting for 25% of global EV manufacturing through 2020, up from 23% in 2017. Rivian, with cars built at a former Mitsubishi factory in Normal, Illinois, is putting an American stake in the ground. The companys manager of policy communications, Leslie Hayward, tweeted, US is losing the EV race to China & Europe. No cost, common sense solution: Remove the archaic restrictions on how EVs are bought & sold. She was talking about the 20 or so state laws that prevent direct sales of electric cars. Blocking those sales hasnt helped automakers sell EVs themselvesdirect sales (mostly of Teslas) still dominate. Rivian will produce its pickup and SUV in a factory in Normal, Illinois formerly tenanted by Mitsubishi. Rivian  But there are other perspectives on this. According to Sam Abuelsamid, principal analyst for e-mobility at Guidehouse Insights, While the ICCT study is accurate with respect to the data available through 2020, it has already become outdated by the time of publication. Since the start of 2021 we have already seen numerous announcements of increased investments in both vehicle and battery production.  Abuelsamid points out that both GM and Ford have upped their planned investments by 2025 to $35 billion and $35 billion respectively, and more plants have been announced for conversion with additional plants to come. GM and Ford have now announced four North American assembly plants each that will produce EVs, with Stellantis also in Windsor [Canada]. I expect to see several additional plants announced in the next 12 months from each of these companies. Hyundai will also be making EVs in the U.S., and I expect Toyota to build EVs here within three years. Just last week, Polestar announced it will also produce the Polestar 3 in South Carolina beginning in 2024.  Theres also considerable investment in battery production, Abuelsamid said, including from GM (which said it is building four cell plants for its Ultium batteries), BlueOvalSK and Stellantis. LG Chem is also building two additional cell plants in the U.S., he said. Nic Lutsey, program director at ICCT, said that the organizations analysis actually does include the more recent announcements, with the exception of Volvos recent news about the Ridgeville, South Carolina plant (which will also produce an electric version of the XC90, in addition to Polestar 3). Lutsey says ICCT is still not seeing the kind of ramp-up that would propel U.S. investment past Europe and China. That trend is not imminent, he said. A huge factor is what U.S. regulations are in place. The automakers want the smoothest possible glide path to electrification, and theyre not likely to over-comply. Really, it depends on what the Biden administration does. Right now theyre pushing back the rules implemented during the Trump administration, but theyll need to come up with much stronger regulations going forward if the U.S. is to become an EV investment leader.  Lutsey said opening more states to EV sales would be useful. It would certainly help to open up every possible channel, he said. Its unfortunate that Tesla had to work through so many additional barriers.  Eighty percent of the EVs sold so far were produced locally for their customers, so it matters where plants are located. The U.S. market has remained steadily behind, with fewer than 360,000 EV sales annually from 2018 through 2020, whereas Europe saw explosive growth from 390,000 to more than 1.3 million and China grew from about one million to more than 1.25 million in the same period, ICCT said. There are seven assembly plants that produce only EVs in the U.S., and they currently account for only 16% of production capacity. Three are owned by GM, two by Tesla, and one each from Rivian and Lucid. Five automakersFord, Stellantis, Toyota, Honda, and Nissan, responsible for up to 1.5 million vehicle sales annuallyhavent announced EV-only plants. As noted by Abuelsamid, however, a Toyota decision could be forthcoming, and Stellantis plant is just across the river from Detroit in Windsor, Canada.