Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Videos
    • Podcasts
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CFO of the Year
    • Notable Leaders in Sustainability
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics Caps + Closures: A Global Online Event
    • Women Breaking the Mold Networking Forum
    • Bioplastics Live
    • Numbers that Matter Live
    • PFAS Live
    • Plastics in Politics Live
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Resin Prices
    • Resin Prices Overview
    • Commodity Thermoplastics
    • High Temperature Thermoplastics
    • Engineering Thermoplastics
    • Recycled Plastics
    • Thermosets
    • Europe - Virgin
    • Europe - Recycled
    • Europe - Feedstock
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
News
June 21, 2021 11:27 AM

EVs change the rules on where to build cars

Urvaksh Karkari
Automotive News
  • Tweet
  • Share
  • Share
  • Email
  • More
    SK Innovation
    The first 60 workers hired at SK Innovation's battery plant under construction in Gerogia.

    Swedish auto startup Polestar's decision to build a midsize electric crossover in South Carolina illustrates a new truth about vehicle manufacturing in the coming decade: Electric vehicles are changing the rulebook on how automakers think about sourcing products for the U.S.

    EVs are transformative, say many analysts. And the transition to battery-electric vehicles could redefine the industry's footprint, says Michael Robinet, executive director of IHS Markit.

    Electrification is no longer "some sort of fantasy," he said, as several EV-related announcements, including Polestar's decision, came from the industry last week. "The industry is moving in this direction — full stop."

    Polestar's move to build in the U.S. shows why.

    The company, which is affiliated with Volvo Cars and its Chinese parent company Geely, has barely begun to establish a sales foothold in the U.S. But it will produce the coming Polestar 3 crossover at Volvo's plant in Ridgeville, S.C.

    That's a change from established industry practice. Import brands historically spent years nurturing U.S. sales results before being willing to consider the expense of an American production base. When they did take the plunge, often it was for a nameplate or segment with an established sales demand.

    Even then, when such an investment was greenlighted, it might have been years more before the venture got around to sourcing its key components locally, including engines or transmissions.

    The industry's rush to electrification appears to be changing that thinking. For a variety of reasons, EVs are getting U.S. production lines from the get-go.

    "Build where you sell" will become more profitable in the case of EVs, said Sam Fiorani, vice president at AutoForecast Solutions. "With the added cost of shipping these heavier vehicles, manufacturers already have good reason to source these models in North America for local consumption."

    EVs also present manufacturers with a new cost-of-labor equation because they are relatively less complex to assemble. EVs and their battery packs also use plastics extensively, both to reduce weight and within individual battery cells with polyethylene film separators as well as inside battery packs.

    "The reduced labor force needed to assemble EVs will provide less reason to produce them in low-wage regions of the world," Fiorani said.

    U.S. manufacturing also insulates an automaker from the vagaries of geopolitical tensions and tit-for-tat trade tariffs — concerns that rattled industry planning during the Trump administration.

    By building the Polestar 3 in the U.S., the brand will avoid the 27.5 percent tariff levied on its China-made Polestar 2 fastback imported to the U.S.

    Tariffs were "one of the variables in the economic calculation," Polestar CEO Thomas Ingenlath told Automotive News last week.

    The manufacturer is absorbing some of the Polestar 2's tariff cost to keep the starting price of $61,400, including shipping, competitive. But Polestar could take an even bigger profit hit from tariffs when it brings a mid-$40,000 single-motor version to the U.S. in the fourth quarter.

    Sustainability was another motivator. "Producing where you sell the cars is a very favorable setup if you want to reduce your CO2 footprint," Ingenlath said.

    U.S. production of the Polestar 3 puts the crossover close to what the automaker expects to be its primary market. Crossovers are the largest vehicle segment in the U.S., according to the Automotive News Research & Data Center.

    Other automakers share Polestar's thinking for the U.S. Nissan Motor Co. produced its first U.S. market EV, the Leaf, in Smyrna, Tenn., in 2012 — requiring a $1.6 billion investment in new manufacturing capabilities. Honda Motor Co. said this year it will rely on a U.S. manufacturing deal with General Motors to obtain new EVs for its Honda and Acura brands. Mercedes-Benz plans to introduce new EV models from its plant in Vance, Ala., where it is constructing a $1 billion battery module plant to support the effort.

    Hyundai Motor Group has committed $7.4 billion to U.S. investment necessary to increase its position in EVs, although it has not said how that money will be used. GM last week said it is boosting its investment plans for EVs and autonomous driving technology to $35 billion through 2025, a 30 percent increase over plans announced in November.

    "GM is targeting annual global EV sales of more than 1 million by 2025, and we are increasing our investment to scale faster because we see momentum building in the United States for electrification," CEO Mary Barra said in a statement.

    Steve Fecht, General Motors Co.
    GM is doing most of the development work on its second-generation Ultium cells internally at its Global Technical Center in Warren, Mich. This facility features a fabrication line with polymer mixing, slurries, a coating machine and a cell assembly room.

    Jeff Schuster, president of global forecasting at LMC Automotive, said EVs have the potential to "contribute to a renaissance in U.S. production growth."

    A key part of that surge — and another factor in automakers' willingness to put EV factory lines in the U.S. — is the location of the plants that produce the batteries necessary to power the new vehicles.

    There are just three battery cell manufacturing plants operating in the U.S. — in Michigan, Nevada and Tennessee. But a wave of new battery plants is coming, and the plants are expensive.

    GM said it will spend $2.3 billion with battery partner LG Energy Solution to build a plant in Spring Hill, Tenn. The partners have a separate battery project under construction in Lordstown, Ohio.

    South Korea's SK Innovation will soon open a battery plant in Commerce, Ga., that will supply Volkswagen's U.S. EV plants as well as some of Ford Motor Co.'s. SK's project is set to cost $2.5 billion, but the company expects to double that investment a few years from now.

    Guidehouse Insights estimates that current and planned EV battery projects will total $35 billion in investments.

    Those projects illustrate another reason EV manufacturing is following a different rulebook from past traditional vehicle planning.

    Until now, automakers had existing engine plants and engine platforms available to create new vehicles or to assemble cars that would be sold in the United States. Japan, Europe and South Korea had ample capacity for engine production.

    But because EV models are relatively new, there isn't a robust battery supply infrastructure in the U.S. to support them. Virtually every new EV that will come to U.S. showrooms in the coming decade will require new battery manufacturing capacity to make it possible.

    When deciding where to build EVs, there are several considerations, including logistics. An assembly plant near battery cell factories or EV systems suppliers may be prioritized over one that is farther away, Robinet said.

    "You're going to want to make sure it's as close as possible to reduce costs," he said.

    It may help Polestar in South Carolina that one of the automaker's investors is the South Korean conglomerate SK Inc., which owns SK Innovation. SK's new plant is 250 miles from Polestar's future assembly line.

    Polestar's Ingenlath declined to comment on whether SK would supply the batteries for the South Carolina-made Polestar 3s.

    But he noted that other critical component suppliers have also stepped up with new investment in EV technologies, and that will make it easier for Polestar to create its U.S. supply chain.

    "Now, when it comes to sourcing Polestar 3, that supply chain has already heavily" electrified, Ingenlath said.

    "The Bosches, the Continentals, the Hellas of this world are ... adjusting their product offer."

    RECOMMENDED FOR YOU
    Florida beats out Las Vegas, Chicago for NPE through 2033
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    Resin shipper Plastic Express spending $80M to expand in Georgia
    2
    Industry giants launch Global Impact Coalition with focus on net zero
    3
    Nissha buys Isometric to build micromolding presence
    4
    PureCycle lays off 22, CFO departs
    5
    EPA orders Inhance to stop its HDPE barrier coatings, citing PFAS concerns
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Find more newsletters at plasticsnews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CFO of the Year
        • Notable Leaders in Sustainability
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Videos
      • Podcasts
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics Caps + Closures: A Global Online Event
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
      • Editorial Livestreams
        • Bioplastics Live
        • Numbers that Matter Live
        • PFAS Live
        • Plastics in Politics Live
        • PN Live: Mergers and Acquisitions
        • Polymer Points Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Resin Prices
      • Resin Prices Overview
      • Commodity Thermoplastics
      • High Temperature Thermoplastics
      • Engineering Thermoplastics
      • Recycled Plastics
      • Thermosets
      • Europe - Virgin
      • Europe - Recycled
      • Europe - Feedstock
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified