Market Insights

EPA’s Bold Emission Standards Spark US Battery Production Concerns

January 24, 2024 by Claire Turvill

The EPA has set ambitious standards for vehicle emissions. To comply, U.S. manufacturers must ramp up electric vehicle battery production.

The U.S. Environmental Protection Agency (EPA) has set ambitious standards for nationwide vehicle emissions. U.S. manufacturers must ramp up electric vehicle (EV) battery production to comply with these new requirements and address growing demand.

 

Electric vehicle battery production.

Electric vehicle battery production. Image used courtesy of Adobe Stock

 

The standards for light-, medium-, and heavy-duty vehicles beyond the model year 2027 promise a substantial decrease in climate and air pollution. This reduction is potentially beneficial if battery production can meet the expected demand.

 

Battery Demand, Investment, and Supply Chain

According to a recent report from the U.S. Environmental Defense Fund (EDF), the declared production capacity for EV batteries in the U.S. is well underway to surpass the anticipated demand outlined by EPA’s proposed standards.

Since 2021, government and private sectors have invested about $92 million in shoring up the battery supply chain

By 2028, EDF expects the U.S. will produce over 1,000 gigawatt hours (GWh) of batteries annually based on announced production. This is enough to meet expected 2030 demand and up to 85 percent of anticipated 2032 demand.

 

Projected U.S. EV Battery Demand and Announced Battery Production Capacity (2022-2032).

Projected U.S. EV battery demand and battery production capacity (2022-2032). Image used courtesy of EDF

 

Approximately 90 percent of the projected battery demand is anticipated for light-duty (passenger) EVs. The remaining 10 percent will be distributed between medium-duty (pickup trucks or vans) and heavy-duty (delivery trucks, semi-trucks, buses) vehicles.

 

Battery Production Projections

EDF used publicly disclosed information about battery manufacturing plants to calculate expected manufacturing capacity. This included details on monetary investment, battery capacity, and production start date. Currently, Michigan is the state with the largest announced battery production at 140 GWh per year. 

 

States with the highest announced battery manufacturing capacity per year.

States with the highest announced battery manufacturing capacity per year. Image used courtesy of EDF

 

The evolving demand for EVs, coupled with tax credits and incentives outlined in the Inflation Reduction Act, presents a compelling rationale for battery manufacturers to invest in building EV batteries in the U.S.

Even with construction delays or shifted production timelines, EDF anticipates the U.S. will still have enough battery supply to meet demand. The average duration from facility announcement to the anticipated start of production is 2.7 years. EDF may not have included additional facilities starting operations in 2027 or beyond.

As U.S. manufacturers expand battery production capacity, simultaneously enhancing battery recycling capacity could ensure that the increasing demand for electric vehicles is effectively met.