Denver-based Clean Energy Associates (CEA), a sustainability advisory company, released a report that forecasts lithium-ion cell manufacturing growth in the coming years.
The report said North America became the fastest-growing regional market for planned battery cell manufacturing before the end of 2022---an effort fueled by the Inflation Reduction Act (IRA). Meanwhile, Europe witnessed several delays and cancellations of multiple battery manufacturing projects due to costs and unfavorable policies, resulting in North America surpassing it.
CEA’s study expects China to remain the global leader in the battery manufacturing space, but its share will decline in the coming years. That said, CEA projects global battery cell manufacturing to grow 186%, or three times, by 2025.
Several North American investments have made headlines in recent months. Ford, in partnership with CATL, will set up a 35 gigawatt-hour lithium iron phosphate cell production facility in Michigan. Envision AESC will collaborate with BMW to build a battery plant in South Carolina with an annual capacity of 30 GWh. Canada-based Electrovaya is expected to inaugurate its first gigafactory in the U.S. in New York State by the end of 2022.
Alongside the $7,500 federal tax credit that consumers can qualify for, several incentives exist for manufacturers, encouraging them to ramp up their investments. For example, the legislation allows battery cells to qualify for a credit of $35 per kilowatt hour of capacity, while battery modules could qualify for a credit of $10 per kilowatt hour of capacity, or $45 in the case of a battery module that does not use battery cells, as per the IRA.
Another study by Axios revealed that in 2023 alone, Tesla is expected to earn $1 billion in tax credits for batteries, thanks to the new EV-friendly policies.
Even the likes of Ford and GM will benefit from the IRA provisions. Ford expects $7 billion in tax credits between 2023 and 2026, while GM will save about $300 million in tax breaks this year. The Axios report also mentioned that manufacturers producing 70 kWh batteries for 1 million vehicles could rake in up to $2.45 billion annually.
Abby Andrews