The lithium-ion electric vehicle (EV) battery market in the United States appears poised for a correction after experiencing robust growth and substantial investments over the past few years.
Despite undeniable growth in the EV sector, the pace of expansion has encountered some hiccups, prompting certain EV battery manufacturers to recalibrate their strategies and delay investments in new battery facilities. Recent reports from the Financial Times highlight that two South Korean battery manufacturers, LG Energy Solution and SK Innovation’s SK On, have made slight reductions in their U.S. workforce.
LG Energy Solution implemented layoffs affecting 170 workers at its Michigan plant, while SK On laid off over 100 workers at one of its two facilities in Georgia in September. Additionally, SK On experienced delays in its joint project with Ford in Kentucky.
The corrections in the lithium-ion EV battery market are observed in the context of the industry’s rapid pursuit of gigafactories, spurred by nearly 1,000 gigawatt-hours of annual EV battery manufacturing capacity planned in North America by 2030. The Inflation Reduction Act of 2022 played a role in supporting these investments, offering substantial subsidies and stipulating local production requirements for eligibility for EV incentives.
While both LG Energy Solution and SK On are anticipated to achieve increased EV battery production and sales, adjustments in the short term are likely. Panasonic, for instance, is constructing a new plant in the U.S. but had to reduce battery output in Japan for a specific cell type used in Tesla’s Model S and Model X (the 1865-type).
Despite these adjustments, the foundation for a robust EV battery industry in the U.S. has been established, with the majority of investments expected to proceed as planned. The industry anticipates fluctuations on the road to electrification, considering the significant scale-up required to move closer to widespread electrification in the all-electric vehicle market and battery production.
