Federal EV Tax Credit Is Prompting Massive US Investment

Electric Vehicles / 6 Comments

Toyota, Honda, and Tesla-Panasonic are all trying to get EV battery plants up fast.

On a daily basis, it seems CarBuzz is reporting on the rapidly changing state of EVs. Whether it is Panasonic seeking to build massive new plants in the midwest to supply Tesla or gas-powered stalwarts like Dodge announcing the death of the V8, then dropping an insane new concept like the Dodge Charger Daytona EV. This market shift would be seismic enough had the US government not stepped things up even more with the Inflation Reduction Act, extending the $7,500 EV tax credit, but only to manufacturers whose vehicles are below a certain price threshold and, crucially, have batteries assembled in the USA. Because of that, not every EV makes the cut.

The move has prompted many automakers to start moving quickly. In a matter of weeks, several massive announcements have come from various automakers, each pertaining to battery production within North America.

Toyota Ministry of Industry and Information Technology 2023 Toyota bZ4X Badge Toyota
2023 Toyota bZ4X Badge

The $7,500 tax credit from the Inflation Reduction Act excludes foreign automakers like VinFast, which has cut its prices by $7,500 to compensate. Rivian has taken similar measures to try and get its customers the best possible deal. Even larger OEMs like Hyundai and Kia are hopping mad they are excluded and are ready to put up a fight before the proposed Georgia EV battery plant comes online. But other large automakers like Toyota and Honda are all making big, expensive moves amounting to billions of dollars worth of investment.

Toyota just dropped an investment of another $2.5 billion into a future EV battery plant in North Carolina. It wasn't necessarily news since the plant had been announced last year with a 2025 completion date. The original plan for investment was just under $1.3 billion to supply 800,000 EV cars, SUVs, and trucks. But now Toyota is boasting that the new Toyota Battery Manufacturing plant will balloon to over 2,100 workers, more capacity, and a total investment just south of $4 billion.

2023 Toyota bZ4X Forward Vision Toyota 2023 Toyota bZ4X Rearward Vision Toyota
2023 Toyota bZ4X Forward Vision
2023 Toyota bZ4X Rearward Vision

Toyota may have come to the EV party late, but the largest automaker in the world is also poised to dominate the EV landscape. The new Toyota bZ4X crossover may have gotten off to a bad start with recalls but the company has an impressive off-road EV concept and a host of others coming soon. To remain competitive, the automaker needs to make batteries in the US and quickly meet manufacturing and country of origin requirements.

Toyota may have had one of the larger announcements, but there have been others from various partnerships that are forging ahead. Honda has teamed up with LG on a joint plant venture to construct a $4.4-billion EV battery plant in the US that can supply its forthcoming EVs built in conjunction with General Motors.

Tesla Tesla Tesla Tesla

Panasonic has started to make moves to dominate the US EV battery plant landscape with partner Tesla. Panasonic has had a supplier relationship with Tesla for over a decade. But as Tesla has evolved, so too is Panasonic, branching out with a $4 billion plant in Kansas that will be the largest in the world, while another plant equal in size and investment in Oklahoma is all but confirmed.

The movers and shakers aren't only focusing within American borders though. BMW's Mexican production facility has asked the mothership in Germany to assign it EV production, which would comply with the new legislation. Meanwhile, Nissan recently announced the closure of an engine manufacturing plant that once built engines for Mercedes, with the possibility remaining open for it to be reassigned as an EV manufacturing plant.

We predict this is just the beginning for OEMs. While the new legislation may not have forced them into decisions that weren't already in the pipeline, it has accelerated the timelines and prompted greater investment in the US.

Panasonic Panasonic Tesla 2022 Tesla Cybertruck Trunk Space Tesla
2022 Tesla Cybertruck Trunk Space

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