US is now a world leader in attracting investment in electric vehicles

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Since President Biden took office, investment in electric vehicle and battery manufacturing in the United States has skyrocketed to $312 billion, more than any other country. Total investment commitments by manufacturers of electric vehicles and electric vehicle batteries, by region.

The United States is the top country for attracting investment in electric vehicles (EV) and battery manufacturing, outpacing announced investments in China and other countries globally. Companies have announced $312 billion in planned investments in the United States, up from about $75 billion when President Joe Biden took office in 2021, according to an NRDC-commissioned study report And dashboard by researchers from Atlas Public Policy.

Of the $312 billion in planned investments focused on the United States, $223 billion is allocated to specific facilities or initiatives—up nearly $66 billion from January 2023, showing that companies are converting their previous commitments into investments on the ground. More than half of that investment—$133 billion—is earmarked for battery manufacturing and recycling; 32 percent, or about $70 billion, is allocated to electric vehicle production; and $21 billion is targeted at facilities that produce downstream components, such as electric vehicle parts and critical minerals.

After years of China dominating electric vehicle production, the latest data shows a dramatic reversal: The United States overtook China as the top destination for such investments in 2022, just as the Inflation Reduction Act (IRA) went into effect.

In fact, the United States now attracts nearly a quarter of all announced global EV investments. research Research from Atlas and BlueGreen Alliance shows there are now 484 active or planned facilities across 40 states, with Georgia, Michigan, Nevada, North Carolina and Tennessee being the states benefiting most from electric vehicle investments.

Federal tax credits, subsidies and policies stimulate private investment

The surge in industrial investment is largely attributable to the Inflation Reduction Act, passed by Congress two years ago and signed by President Biden. The act provides favorable tax incentives for manufacturing and consumer use. Combined with the U.S. Environmental Protection Agency’s (EPA) strong national clean vehicle standards, it’s resulting in automakers investing in cleaner, more efficient technologies like battery electric vehicles and hybrids. Of the total investment allocated to specific EV facilities or initiatives ($223 billion), nearly half has been announced since the IRA was signed into lawThe EPA's announcement of the final federal vehicle emission standards in March this year to provide greater certainty for global investors.

In addition, consumer tax credits have supported a steadily growing market. The Internal Revenue Service announced $1 billion in absorption between the Clean Vehicle Tax Credit (Section 30D), which provides up to $7,500 in tax credits for new electric vehicles, and the Used Clean Vehicle Credit (Section 25E)offering up to $4,000 for a qualifying used EV. Since the beginning of this year, 125,000 consumers have bought new electric cars and 25,000 bought a second-hand electric car.

This private investment has also been stimulated by programs under the Inflation Reduction Act, including the $1.7 billion announced last month by President Biden to help retool factories to produce up to 11 million electric vehicles annually. The announcements mark a significant global shift, as the commercialization and production of lithium-ion batteries has been dominated first by Japan and then by China for the past three decades. It’s a homecoming of sorts, as American researchers helped invent and develop lithium-ion battery technology in the 1970s and 1980s; one researcher was awarded the 2019 Nobel Prize in Chemistry for his contributions, among others.

Blocking of announced investments

To ensure that these announced investments result in actual domestic projects, and are not relocated to other countries, there is a need for long-term regulation through the enforcement of clean car and clean truck standards, along with successful implementation of the investments under the Bipartisan Infrastructure Law, the Inflation Reduction Act, and state programs. Unfortunately, the oil industry lobby, including the American Fuel & Petrochemical Manufacturers, the spreading of misinformation to try to reverse policies that promote the transition to new, fossil-free technologies to save the American consumer and their wallets addicted to oil.

The good news is that states and counties across the country are seeing real investment that is boosting local economies and creating good jobs. Most state and federal officials know it’s smart to bet on the future, not the past.

What we need now is regulatory stability so that companies can have confidence in investing and continue to meet current commitments, which will ensure that the United States can be a global leader in the EV transition and attract new investment and jobs. And there is a historic opportunity for the United States to build batteries better by making these new supply chains circular and more sustainable through domestic investments in recycling, reuse and waste reduction.

Almost overnight, the United States is poised to become a global leader in innovative, cleaner, and cost-effective electric vehicle manufacturing. Record investments in a cleaner future can boost the economy, create jobs in communities across the country, and provide a cleaner, cheaper way to move people and goods. Let’s get started!

By Jordan Brinn, Clean Vehicles and Infrastructure Advocate, Climate and Energy, and Dr Simon Mui, Managing Director, Transport, Climate and Energy

Thanks to NRDC, the expert blog