In 2023, North America was the fastest-growing battery manufacturing region in the world, moving rapidly to decouple from China’s dominant supply chains. The Inflation Reduction Act production credits gave rise to the so-called “battery belt,” with more than two dozen domestic battery plants promising tens of thousands of high-paying jobs, mostly in red and purple states from Georgia to Indiana.
But as analysts expect EV sales to slow down in the coming months, in addition to the Trump administration’s rollback of the consumer tax credits for EVs, this once-booming battery belt is staring down its most uncertain chapter yet.
Welcome to the Friday edition of Critical Materials, your daily round-up of news and events shaping the world of electric cars and technology.
Also on our radar today: After releasing the preliminary EV sales estimates for the third quarter earlier this month, market research firm Cox Automotive has released the final tally. And it’s mind-blowing. Plus, Tesla posted a strong third quarter for its made-in-China EVs after sales tumbled in the first two quarters.
30%: America’s Battery Belt Faces Uncertainty, Overcapacity
Photo by: Ford
The multi-billion-dollar “battery belt” rising across the Midwest and Southeast promises not only to futureproof the U.S. economy, but also to spur growth in the local counties where they’re being built.
Toyota this year inaugurated its $14 billion battery plant in North Carolina. Panasonic opened a $4 billion facility in Kansas. General Motors and LG Energy Solution have two giant joint-venture factories in the works—one in Tennessee and another in Michigan—each valued at more than $2 billion.
Roughly 20 similar projects are either under construction or recently completed, supplying batteries primarily for electric vehicles. But with Trump’s budget bill ending the $7,500 federal EV tax credit—which helped spur demand by lowering purchase and lease prices—the future of these colossal battery projects looks uncertain.
Projects that were supposed to come online this year, bringing thousands of high-paying jobs to local, often rural counties in Republican-led states, are now facing repeated delays as analysts forecast a slowdown in EV demand.
Here’s more from Reuters this morning:
The uncertain fate of these massive, high-tech factories and their employment has rattled the small rural communities that spent years hitching their economic futures to these projects.
“That’s on everybody’s mind, quite frankly,” said Allan Sterbinsky, who retired as mayor of Stanton in December and advocated for the site for years before Ford came to town. Some residents worry that Ford will never follow through on the plant, the former mayor says. Others hope the company will repurpose the 3,600-acre site if demand doesn’t increase for EVs.
The Ford plant in question is located in Stanton, Tennessee. The automaker plans to build its next-generation electric truck there, alongside a battery factory being constructed with Korean partner SK On. Local reports indicate construction continues, but production has been delayed until 2027.
Despite the broader EV market uncertainty, most battery projects are still moving forward—including Hyundai’s massive Metaplant Georgia and Ford’s two other battery factories in Michigan and Kentucky.
The risk, however, is potential overcapacity. As Reuters notes:
By 2030, the planned battery plants would provide the capacity to produce 13 million to 15 million EVs annually, according to figures provided to Reuters by research firm Benchmark Intelligence. But the industry now might only need about one-quarter of that factory space. S&P Global Mobility predicts only around 3 million EVs will be produced that year, and some would likely use batteries imported from other countries.
Still, projections tell only part of the story. EV adoption has long been constrained by high prices compared to gasoline vehicles. It’s unclear whether these forecasts account for the upcoming wave of more affordable, more compelling EVs, models that could change the math.
This week alone underscored that shift. Tesla rolled out the new Standard trims of the Model Y and Model 3, while General Motors unveiled the next-gen Chevy Bolt, which is now the cheapest EV in America, starting under $30,000.
Yes, battery overcapacity and market uncertainty still loom. But more affordable EVs are on the way, and automakers are adapting fast, leaning into hybrids and energy storage systems as a temporary hedge against the slowdown.
60%: U.S. Automakers Sold Record Number Of EVs In Q3
Photo by: InsideEVs
Earlier this month, market research firm Cox Automotive estimated U.S. EV sales for the third quarter at around 410,000 units. Now the final tally is in, and it’s even higher. Americans bought 438,487 electric vehicles between June and September, marking nearly 30% year-over-year growth, Cox Automotive said on Friday.
That surge pushed EVs to 10.5% of total U.S. vehicle sales, a new record and a big jump from the 8.6% share during the same period last year. The Sept. 30 expiration of the $7,500 federal tax credit made buyers rush to lock in the incentive before it disappeared.
Tesla still dominated the charts, selling 179,525 vehicles in the quarter, a 7.5% increase from last year. Of that total, a staggering 114,897 were the refreshed Model Ys, up nearly 30% year-over-year. The heavily upgraded crossover went on sale earlier this year, and it’s clearly resonating with customers.
Other models that saw strong demand included the Chevy Equinox EV, Hyundai Ioniq 5 and Honda Prologue.
90%: Tesla’s Chinese-Made EVs Also Witness Sales Growth
Photo by: Tesla
Tesla’s Shanghai Gigafactory isn’t just serving the Chinese market; it’s also the company’s largest export hub. Sales of vehicles built at the plant rose nearly 3% in September to 90,812 units, according to data from the China Passenger Car Association cited by Reuters.
For the quarter, Tesla sold 241,890 China-made EVs, its fourth-highest total on record. Many of those vehicles were shipped to Europe, while the company also began its first deliveries in India. The refreshed Model Y and its newly launched long-wheelbase variant appear to have given Tesla’s China sales an extra boost.
100%: Is America Staring At Battery Overcapacity Like China?
BMW Neue Klasse Gen6 High-Voltage Battery Pack Assembly
Photo by: BMW
China is already producing far more batteries than what its domestic market currently needs. As EV sales cool in the U.S. while massive new battery plants keep breaking ground, is America headed for its own overcapacity problem?
Will these projections look different once a new wave of affordable, genuinely compelling EVs hits the market and starts selling on merit rather than subsidies? And with tens of thousands of jobs on the line, many in Republican-led states that have bet big on this industry, how should the U.S. government respond to protect these workers, but also keep the battery belt humming?
Have a tip? Contact the author: suvrat.kothari@insideevs.com
