The Biden administration’s recent decision to raise tariffs on imports of electric vehicles (EVs) and batteries from China, and more, raises the question of how the levels of projected domestic EV and battery manufacturing capacity compare to projected demand, as well as demand pathways consistent with US climate change commitments under the Paris Agreement.
In this report, we provide insight into this question by comparing announced domestic EV and battery manufacturing capacity from the Clean Investment Monitor database with EV and battery demand projections from Rhodium Group’s 2023 Taking Stock report. We find that if all announced and under-construction battery manufacturing facilities come online as scheduled and produce at expected volumes, the US will produce more battery cells and modules than what domestic demand will consume by 2030. If EV demand comes in at the lower end of the Rhodium projections (or falls short of those projections), we would expect battery manufacturers to slow the pace of construction or production ramp-ups of currently announced facilities.
In terms of EV manufacturing, the facilities that are operating, under construction, and announced would produce more than projected demand by 2027 if they come online as expected, but would fall short of projected demand by 2030. If demand continues to track Rhodium’s Taking Stock projections and the IRA incentives for EV purchases remain in place, we would expect companies to announce additional domestic production capacity in the next several years, given the average production timelines for new EV manufacturing facilities and the ability of manufacturers to relatively quickly repurpose internal combustion engine vehicle manufacturing to produce EVs, provided they can source batteries.