Automotive News Canada - April 2022 - 18

18
* APRIL 2022
EV supply chain: $17 billion...and counting
The unprecedented
wave of spending
is just scratching
the surface as the
industry begins
a massive overhaul
By JOHN IRWIN
AUTOMOTIVE NEWS
THE $5-BILLION PLAN FOR A
joint LG-Stellantis battery plant
in Windsor, Ont., is part of a
wave of unprecedented spending
by automakers and battery
companies as they begin creating
North America's EV supply
chain.
Over the past year, companies
have announced investments
totaling about Cdn $17 billion.
That's a colossal supply-chain figure,
but it doesn't fully capture
the scale of recent investment.
Not included are other projects
for which automakers have
not clarified how much of their
investments are earmarked for
new battery plants and how
much will go toward the vehicle-production
lines that will
need the batteries.
For Ford Motor Co.'s Blue Oval
City project in Tennessee, Ford
and SK Innovation plan to spend
a combined $7 billion on an EV
battery plant and a new vehicle-assembly
plant, but they have
not separated how much will go
where. SK Innovation is a global
energy company and a maker
of EV batteries headquartered in
South Korea.
Similarly, Volkswagen said on
March 21 it will spend $8.8 billion
on EV development in North
America, including potential battery
production, but it has not
broken down the allocation.
The $17-billion tally also does
not include projects that have
been reported, or even confirmed,
by global battery producers but
have not yet been finalized.
Those include a possible project
from Contemporary Amperex
Technology Co. of China to
select a North American site for
a new $6.2-billion battery plant.
Tesla battery supplier Panasonic
is also scouting for a new
North American site, and so is
Envision AESC of Japan, which
intends to build a plant to supply
Mercedes-Benz EV production in
Alabama.
The enormous scale of new
investment is unprecedented in
automotive history, said Evan
Horetsky, a partner at U.S.-based
management consulting firm
McKinsey and Co. and a former
Tesla executive.
" We're trying to find a hisWe're
trying to find a historical
match. Basically, this is Industrial
Revolution scale.
EVAN HORETSKY
McKinsey and Co.
torical match. Basically, this is
Industrial Revolution scale, "
Horetsky said. " And we're seeing
that we're only at the starting
point of this scaling journey. "
In the United States alone,
McKinsey anticipates battery-cell
manufacturing capacity to grow
by 45 to 50 per cent each year
until 2025.
But is the industry over-responding
to the allure of a new
opportunity?
Ford and battery partner SK Innovation of South Korea are
building an EV battery complex in Kentucky. PHOTO: FORD
Observers don't think so. In
fact, if the industry hopes to
manufacture enough batteries
to support the aggressive EV
sales targets set by automakers
and governments, the eruption
of investments might be merely
scratching the surface. The
U.S. government, for instance,
has set a target of having half of
all U.S. new-vehicle sales be electric
by 2030. That target alone
would require batteries for about
eight million new EVs a year. In
Canada, the federal government
has set a target of having at least
60 per cent all new-vehicle sales
be electric by 2030. That would
represent about one million vehicles
based on 2021 annual sales.
McKinsey expects global
demand for lithium-ion batteries
to grow to about 3,500 gigawatt-hours
by 2030, a dramatic
increase from the 2019 capacity
of about 220 GWh. Horetsky said
that will require the opening of
200 or more new battery factories
around the world in the coming
years, including many in North
America to support EV production.
" A
lot of that capacity has been
announced now, but we're still
seeing that there are more projections
of demand than supply,
especially as we head toward 2030
and more of these regulations
kick in, " Horetsky said. - ANC
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Automotive News Canada - April 2022

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