The market for electric vehicles has been slow to ramp up, but the segment is betting big on future demand resulting from regulatory changes and volatility in the oil and gas market, which drives up costs for drivers.
An estimate from JP Morgan predicts that 30% of vehicle sales will be composed of electrics and hybrid-electrics by the year 2025, which means the time is now for automakers and component suppliers to be amassing scale in order to accommodate increased demand.
In particular, the lithium-ion battery that is central to many of these EV designs is expected to be in high demand. IHS Markit told Automotive News that when it last forecasted the need for the batteries last year, demand was estimated at around eight times the global production capacity. Since then, that figure has risen sharply.
It’s this predicted demand that helped support the plan for a $1.67 billion facility in North Georgia for SK Innovation, a South Korea-based battery maker who pledged to bring 2,000 jobs to the area by 2022.
But even with a 2,000-person strong operation, Automotive News calls its prospective output “a drop in the bucket,” at 9.8 gigawatt-hours produced annually. This is in contrast to what IHS Markit says will be demand for 550 gigawatt-hours of capacity by 2025.
Auto News says more will need to be done to meet the industry’s shifting needs, and that the battery plants necessary to meet these requirements will most likely want to be situated near electric vehicle manufacturing plants. Right now, SK actually doesn’t have any U.S. customers but is well positioned geographically to align with the major automakers building in Georgia, Alabama, and Tennessee.
It appears that there’s plenty more room for battery plants to take advantage of the mounting need in the U.S. automotive market, but they’d better get moving if they want to establish themselves in time to take full advantage of this burgeoning space.