Since 2022, the growth of electric vehicle (EV) battery manufacturing has seen an exponential increase in the southern United States. This expansion is concentrated in eight states, namely Georgia, North Carolina, South Carolina, Tennessee, Kentucky, Michigan, Indiana, and Ohio which together form the 'Battery Belt,' a moniker used to describe this emerging cluster.
The Rise of the Battery Belt: Unpacking the Growth Drivers of Regional Manufacturing
A variety of historical underpinnings and intentional policy decisions by these states must be traced to understand the present-day uptick of battery manufacturers in the region. Michigan, Indiana, and Ohio carry the legacy of the erstwhile 'Rust Belt,' once considered the manufacturing stronghold of the United States. Established transportation systems—highways, railways, ports, and logistical networks—along with brownfield sites that could be repurposed for modern manufacturing, incentivized several auto makers to flock to these states in the early 1990s. Other states also experienced an automotive industry boom. Major companies like Toyota relocated to Kentucky and Nissan established operations in Tennessee, to take advantage of lucrative tax incentives, abundant land, and low energy costs. Most companies entrenched their operations in the region, established sprawling factories, and have since continued to expand.
Today, this expansion has taken the form of automakers diversifying their operations into the EV manufacturing segment. Driven by the imperatives of climate change, prominent names such as Honda in Ohio and Hyundai and Kia in Georgia, to name a few, are investing heavily in EV production. This shift has prompted many battery manufacturers, a critical component in EVs, to establish operations close to their primary markets—the automakers they supply. The trend has resulted in the emergence of what is being called the ‘battery belt’ of the US.
Several additional factors have contributed to this burgeoning development. Of these eight states, seven (with the exception of Ohio) are “right-to-work” states, which results in lower labor costs, as the law prevents the formation of strong unions. Also attractive to the battery manufacturers has been the availability of a vast talent pool. Workforce development initiatives such as Georgia’s Quick Start Program, the GIVE initiative in Tennessee, and NCWorks in North Carolina have been instrumental in providing targeted training to meet the needs of the battery sector. Furthermore, lithium, a crucial metal for battery production, is abundant in North Carolina. Recently, the Department of Defense awarded a $90 million grant to Albemarle Corporation to initiate lithium mining in the state. The gradual localization of various components of the battery supply chain in the south, is a key advantage producers aim to leverage.
From Dependency to Resilience
In the wake of the Covid-19 pandemic, shortages and bottlenecks in critical inputs, including batteries, have revealed significant vulnerabilities in the battery value chain. Simultaneously, tensions have heightened over the national security risks that could arise if China were to cut off battery exports to the United States. This concern is amplified by the intensifying US-China competition in clean energy and the United States’ overwhelming dependence on China, which controls 70-90% of the global battery market share. To address these challenges, President Joe Biden signed the The Inflation Reduction Act (IRA) in 2022. The IRA offers tax credits to attract investments and spur battery production, aiming to create and bolster domestic battery supply chains. Consequently, IRA incentives have provided a complementary push to the already conducive environment offered by the southern states.
Indo-Pacific in the South
An interesting aspect of the "battery belt" is the growing presence of battery-producing firms originating from Asia. This is largely driven by the strong strategic partnerships the United States shares with countries like South Korea and Japan, which are home to many of these companies. Additionally, in an effort to circumvent Chinese influence, a reciprocal relationship has developed. Through initiatives such as the US-Japan-Republic of Korea (ROK) Commerce and Industry Ministerial Meeting, the United States announced its intention to share battery manufacturing technology with its partners. This will enable them to reduce reliance on China. Beijing, which dominates this sector, can monopolize critical technological know-how and leverage its control by threatening to block access, posing a significant risk. As a result, this dynamic has boosted foreign direct investment (FDI), created jobs, and contributed to overall economic growth in the US. Furthermore, as the battery markets in East and Southeast Asia become increasingly saturated with Chinese firms, gaining access to new markets serves as a significant incentive.
The influx of Asian firms and their contributions to the growth of the battery belt underscore that the United States’ relationship with the Indo-Pacific, underpinned by this sector, is poised for continued growth.
Battery Manufacturers with Origins in Asia and Located in the Battery Belt:
Name of Company | Country of Origin | Location in US State | Investment |
Hyundai / SK | South Korea | Georgia | $5,500,000,000 |
Honda / LG Energy Solution (LGES) | South Korea/ Japan | Ohio | $4,400,000,000 |
LG Chem | South Korea | Tennessee | $3,200,000,000 |
Stellantis / Samsung SDI | South Korea | Indiana | $3,200,000,000 |
LG Energy Solution (LGES) | South Korea | Michigan | $3,000,000,000 |
Hyundai / LG Energy Solution (LGES) | South Korea | Georgia | $2,000,000,000 |
SK Battery America (SKBA) | South Korea | Georgia | $19,000,000 |
Samsung SDI | South Korea | Michigan | $41,000,000 |
Enchem America | South Korea | Tennessee | $152,500,000 |
Soulbrain MI | South Korea | Indiana | $75,000,000 |
NVH Korea | South Korea | Georgia | $72,000,000 |
Dongwha Electrolyte USA Inc. | South Korea | Tennessee | $70,000,000 |
Fujihatsu & Toyotsu Battery Components | Japan | North Carolina | $60,000,000 |
Dai Nippon Printing Co. | Japan | North Carolina | $233,000,000 |
Hitachi Astemo Americas | Japan | Kentucky | $153,000,000 |
VinFast | Vietnam | North Carolina | $4,000,000,000 |
Source: Conness, J; IRA and CHIPS Act Investments: A Complete Tracker; November 14, 2024; https://www.jackconness.com/ira-chips-investments
Tanya Nagrath is a Fall 2024 Young Professional at the East-West Center. She is a recent graduate from the Master’s in Foreign Service Program at Georgetown University, where she concentrated in Science, Technology and International Affairs (STIA).