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How the presidential election may affect the US battery belt
The energy transition has breathed new life into the Southeast US, traditionally a hub for automotive manufacturing, which is now home to a sprawling EV supply chain. This shift directed billions in public and private investment into states such as Georgia, North Carolina, South Carolina, and Tennessee, forming the so-called Battery Belt.
The Biden-Harris administration has played a pivotal role in catalysing investment, committing over $135 billion to build an EV ecosystem between the Bipartisan Infrastructure Law (BIL), CHIPS & Science Act, and Inflation Reduction Act (IRA). In total, there are 281 policies and incentives, at the federal and state levels, related to batteries for EVs and stationary energy storage.
According to the Environmental Defense Fund, manufacturers have committed $188 billion in US EV and EV battery manufacturing facilities over the past nine years – 82% of which were announced after the BIL was enacted in 2021. Ten states, mostly located in the eastern part of the country, account for 84% of this investment. So far, the EV industry has created 236,000 jobs, estimates the Bluegreen Alliance Foundation.
Some examples include Panasonic’s proposed $4 billion factory in Kansas, which the Japanese conglomerate claims will be the largest battery plant in the world, and Chinese group Gotion High-Tech’s planned facilities in Michigan and Illinois.
South Korea’s LG Energy Solution will spend $17 billion to set up eight factories across North America, two of which as a solo venture and the rest with automotive partners such as General Motors, Hyundai, Honda, and Stellantis. Vietnamese carmaker VinFast will build its own battery plant at the upcoming EV complex in North Carolina.
This crucial government support, however, may change direction based on the result of the looming presidential election.
Progress put in question
The main candidates for the November election are current vice-president Kamala Harris, a Democrat, and former president Donald Trump, a Republican.
Harris has not yet outlined in detail what her policy platform will look like, but it is largely expected that she will build on the progress made by the current administration.
Conversely, there are speculations that another Trump presidency would reverse some of the progress made on the energy transition front. At its latest national convention, the Republican party approved the controversial Project 2025, which asks the next president to defund the energy transition and “stop the war on oil and natural gas.”
However, Trump has distanced himself from the programme and recently adopted a slightly more favourable view of EVs. Weeks after promising he would “end the EV mandate on day one” (which does not exist), he said “a very small slice” of cars should be electric.
“I’m for electric cars, I have to be,” he immediately cautioned at a rally in Atlanta, “because Elon endorsed me very strongly.” Tesla’s ceo and co-founder Elon Musk, the richest person in the world, is supporting Trump.
Another Trump administration may redirect green investment to fund more tax cuts, notes Ben Steinberg, spokesperson for trade body Battery Materials & Technology Coalition (BMTC).
Next year, the 2017 Tax Cuts and Jobs Act is up for review. The bill, which was brought by the Trump administration, slashed a range of taxes, adding an estimated $2 trillion to the deficit by 2028.
“There have been reports that a Trump administration will ‘impound’ funds from the BIL and IIJA [Infrastructure Investment and Jobs Act] on topics they do not support,” Steinberg tells Kallanish. “This is a big concern and will be something that Congress and the industry have a lot to say about.”
According to the nonpartisan group Protect Democracy, there is no inherent power to impound, as the president is barred from unilaterally cancelling funds under the 1974 Impoundment Control Act.
William Tobin, assistant director at the think tank Atlantic Council, says it is unlikely the entire IRA will be scrapped due to the enormous investment committed so far, plus the fact that some Republican policymakers do support certain provisions.
Earlier this month, 18 House Republicans urged their leadership to not fully repeal tax credits if the party gains a majority, as it “would undermine private investments and stop development that is already ongoing.”
Even though they called the IRA “a deeply flawed bill,” they acknowledged that “energy tax credits have spurred innovation, incentivised investment, and created good jobs in many parts of the country.”
This highlights what Tobin calls “the great irony” of the IRA: most of the rewards will be reaped by jurisdictions on the Republican side – including much of the battery belt – even though it was brought forward by Democrat Joe Biden.
Indeed, Republican-led districts have attracted $81 billion in investments into the EV supply chain post-IRA, compared to inflows of $14.3 billion in Democrat-led districts.
Ultimately, Tobin says, if Trump does make some cuts to Biden’s incentives “it would probably be more like a piecemeal approach,” cautioning that “all of this is speculation at this point, and much of the approach which might unfold will be dictated by the political moment.”
Help to compete
Both Tobin and Steinberg stress the country’s EV ecosystem depends on government support and public-private partnerships to continue to survive and thrive. The industry is up against China, which dominates the entire supply chain, from the production of critical minerals to vehicle sales volumes.
The Asian country has implemented numerous policies to spur the development of the industry, including a recent $72 billion tax break over four years on new energy vehicles. The purchase tax exemption move seeks to boost slower car sales growth.
Other incentives and subsidies have also enabled the industry a leading edge in technology maturity and production capacity, which in turn has pushed down the price of lithium iron phosphate batteries to $53 per kilowatt/hour, a 51% drop from 2023, according to BloombergNEF. In comparison, the global price was $95/kWh last year.
“The Chinese have oversupplied the market, suppressing prices, which has eliminated the ability of many projects around the world and in the US to continue operations or get off the ground,” says Steinberg.
“We need the government to step in… These industries are struggling, and the markets are not supporting them with investments. We need a concerted effort by the government to prop up the market and ensure we have price stability and a marketplace which is not controlled by the Chinese.”
Ultimately, the BMTC – whose members include graphite producers Anovion Technologies and Nouveau Monde Graphite, battery cell manufacturers Kore Power and Novonix, and battery recyclers Cirba Solutions and Li-Cycle – wants consistency between administrations.
“It would be incredibly counterproductive to ‘impound’ funds or delay programmes that are already launched,” Steinberg concludes. “We would also like to see the government deploying funding at a faster clip and making it as easy as possible for the private sector to sign contracts or cooperative agreements. We have seen positive movement from the Department of Energy on this front and hope this continues.”
US company Forge Battery, which is building a gigafactory in North Carolina with production scheduled for 2026, remains optimistic.
“Our operations will go as planned regardless of what happens on the political front,” a spokesperson comments. “We intend to produce best-in-class lithium-ion cells, using a US-focused supply chain – something that is very much sought after in the marketplace. We don’t expect the election to impact our go-to-market plan.”
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Anonymous
Very good overview of the weekly steel market.
Anonymous