With the accelerated transformation of the industry to electric vehicles, coupled with the US government's push for local manufacturing, the US auto industry is ushering in the biggest boom in factory construction in recent years.

(Reuters file photo)

[Financial Channel/Comprehensive Report] Driven by the transformation of electric vehicles and the US government's subsidies to attract battery factories to manufacture locally, the US auto industry is ushering in the biggest factory construction boom in recent years.

According to data from the Center for Automotive Research, a Michigan-based nonprofit organization, as of November, the United States has committed to invest about US$33 billion (about NT$1 trillion) in new car factories throughout 2022, including Funding for building new assembly plants and battery factories.

The "Wall Street Journal" reported that the related investment amount in 2017 was about US$9 billion (approximately NT$275.7 billion), which shows the rapid growth in recent years, and the annual total amount is more than 8 times that of 20 years ago.

Data show that about two-thirds of new auto investment announced in the past two years has flowed to the southern United States, and investment activity is moving away from the Great Lakes region (Great Lakes region), the stronghold of the auto industry for the past century.

Please read on...

Automakers adding electric vehicles to their production lines are the biggest factor behind the factory spending spree, and the federal climate bill passed in 2022 is expected to further accelerate U.S. investment, allocating tens of billions of dollars to subsidize electric vehicles and batteries Plant construction, and facilities for processing battery materials such as lithium and graphite.

Some foreign automakers are also targeting U.S. expansion to offset weakness in other global markets, while electric vehicle startups, including Rivian, are building their own manufacturing capabilities.

Rivian will start building cars in Illinois in 2021, and promises to build a second plant in Georgia, which will begin operations in 2026; South Korean giant Hyundai also revealed an investment of US$5.5 billion (approximately NT$) in the state 168.5 billion) plans to set up factories.

According to the estimates of consulting firm AlixPartners, by 2026, the global auto industry plans to invest US$526 billion (approximately NT$16.15 trillion) in electric vehicles.

With signs of a possible economic downturn threatening to dampen consumers' willingness to spend, the risk for the auto industry to bet heavily on electric vehicles may be even greater.

Still, executives at major companies say they believe the momentum created by investing in manufacturing for the future will far outweigh a potential recession.

Ford (Ford) Chief Financial Officer John Lawler once pointed out that the investment must be made now, otherwise the company will lag behind its competitors in the transformation.

State government officials believe that this is a once-in-a-lifetime opportunity to boost the local economy and protect employment.

Southern states such as Georgia, Tennessee and Kentucky have emerged as the biggest winners of new auto plant plans.

Analysts say southern officials have highlighted the advantages of lower energy costs and the abundance of developable land, with automakers also looking for "ready-to-go" sites with certain infrastructure, such as roads and utilities, This will help speed up factory construction.

In the past year, more battery supply chains have returned to the United States. This boom has also spawned many new factories, many of which are expected to be officially put into operation in the next few years.

Most of the world's electric vehicle batteries are currently manufactured in Asia, but transportation costs and the risks of relying on overseas suppliers have prompted more automakers to push for localized battery manufacturing.

Grasp the pulse of the economy with one hand I subscribe to Free Finance Youtube channel

Already added friends, thank you

Welcome to 【Free Finance】

feel good

Already liked it, thank you.

related news