Image source: Inside Climate News. “The EV Battery Boom Is Here, With Manufacturers Investing Billions in Midwest Factories” Available at: https://insideclimatenews.org/news/27102022/the-ev-battery-boom-is-here-with-manufacturers-investing-billions-in-midwest-factories/
Electric vehicle (EV) adoption has accelerated in recent years with EV sales increasing from just 0.2 percent of total car sales in 2011 to 4.6 percent of sales in 2021. It is estimated that EVs could reach 40 to 50 percent of total vehicle sales in the United States by 2030. The federal government has incentivized EV sales by providing an income tax credit for new EV purchases. The first EV tax credit was introduced in 2008 with a cap of $3,400 and was available to the first 60,000 cars per manufacturer. The cap was raised to $7,500 for the first 200,000 cars per manufacturer under the American Clean Energy and Security Act of 2009. The Inflation Reduction Act of 2022 (IRA) changed sourcing standards for this tax credit so that only vehicles with a certain percentage of battery minerals and components coming from North America or United States’ trade partners are eligible. This sourcing requirement incentivizes domestic production of EV batteries.
BloombergNEF analysts found that lithium-ion cell capacity is expected to increase seven-fold in North America between 2022 and 2030. This increase in domestic battery manufacturing may have some benefits for the global environment depending on the restructuring of the supply chains over time. For example, producing batteries and their components closer to where there is demand for EVs will reduce emissions. In addition, the United States uses more nickel from secondary sources, which can further reduce the carbon footprint of EVs. However, this may cause concern in communities that have been harmed by the automotive industry.
While EVs produce fewer emissions over their lifecycle compared to gas vehicles, the manufacturing of EVs produces as much as 80 percent more greenhouse gas emissions than internal combustion engine vehicle manufacturing. A 2023 study found that returning EV battery production to the manufacturer’s country of origin can reduce carbon emissions in the manufacturing process, but it depends on advances in technology and changes in the supply chain.
The surge in North American battery production is being driven by the downstream portion of the EV supply chain in which plants assemble battery packs rather than extracting and processing raw materials. Additional environmental issues will arise if domestic mineral extraction increases. The extraction process for lithium requires an immense amount of scarce fresh water and negatively impacts local ecosystems through water pollution and soil erosion.
Moving forward, environmental justice will be a key issue in EV production. Although new and updated plants and mining operations generate jobs and can benefit local economies, they also produce pollution. Both battery manufacturing and mining location decisions should consider groups that have historically been harmed by automotive manufacturing, including low-income individuals and people of color. A 2021 Empowering a Green Environment and Economy report notes that one way to make the transition to EV production more equitable is to involve community leaders representing these groups in the policy- and decision-making processes. Developing and implementing greener technology should also be a top priority.
