Electric vehicles charging at a charging station

The move towards electric vehicles (EV) has become a full-scale lithium, cobalt and nickel rush. With consumer interest firmly established, governments and manufacturers are pivoting to provide the infrastructure needed to meet the increase in demand.

The Biden Administration recently announced bold goals for an EV future, stating by 2030, 50% of all new vehicles purchased in the U.S. will be electric. In support of Biden’s Investing in America agenda, Congress passed the Inflation Reduction Act of 2022 (IRA), and the White House recently announced the EV Acceleration Challenge to build public-private partnerships that will provide the tools and resources communities need to meet the 2030 goal.

Enticing EV tax credits and incentives for manufacturers

Enacted last year, the IRA ear marks $370 billion for clean energy solutions including carve outs for the manufacturing of EVs, charging infrastructure and battery manufacturing. A portion of the act is designed to incentivize the purchase of EVs and the development of the infrastructure needed to support the growing fleet by providing credits for building residential, commercial and municipal EV charging stations. EV manufacturers can tap into the IRA energy provisions through Section 45X and Section 48C which sets aside $10 billion in investment tax credits. For more information on manufacturing credits, watch Baker Tilly’s webinar: Inflation Reduction Act: what manufacturers need to know now.

Incentives in the IRA build on incentives included in the 2021 Infrastructure Investment and Jobs Act (IIJA). Sections within the IIJA set out to encourage states to begin work on charging station networks and shift public transit to green energy. Governments can tap grants for a variety of projects funded by the act, with the ultimate goal of building a nationwide network of 500,000 public charging stations.

Tucked into the IRA, the Advanced Energy Project Credits (AEPCs) are designed to promote the expansion of U.S. manufacturing capacity, create clean energy jobs in production and recycling, reduce greenhouse gas emissions and procure domestic supply chains for needed materials. The credits can be applied to the costs of rehabbing factories with equipment that lowers greenhouse gas emissions by at least 20%. AEPCs also apply to costs associated with rehabbing, expanding or creating facilities that process, refine or recycle critical EV related material like those needed to manufacture batteries.

While there’s no funding attached to the EV Acceleration Challenge, the challenge encourages private and public entities to assist consumers, businesses and government agencies in accessing EV incentives like the tax credits, increase awareness among the general public and groups with low EV adoption rates on the benefits of EVs, encourage EV fleet expansions and expand community charging access.

Ramping up charging capacity to meet EV demand

Having the charging infrastructure in place to meet the EV demand is critical. To assist governments with the cost involved in building the needed charging stations, the IIJA created the U.S. Department of Transportation’s National Electric Vehicle Infrastructure (NEVI) program.

NEVI seeks to build a nationwide network of charging stations and uses a formula to allocate funds rather than competition-based grants. The program set aside $7.5 billion in EV charging, $10 billion in clean transportation, and over $7 billion in EV battery components, critical minerals and materials. States and municipalities can also apply for a portion of $73 billion earmarked for electric grid and power infrastructure. NEVI funding is available for up to 80% of the cost involved in building out the needed charging infrastructure.

The need is great; charging capacity demand is already increasing. Global sales of EVs jumped 62% in the first half of 2022 over the same period the year before. Expectations are that the market will continue to grow, reaching an estimated $858 billion by 2027. By 2035, Goldman Sachs is predicting electric vehicles will make up half of all global car sales. NEVI funded charging infrastructure projects will ultimately account for 500,000 additional EV chargers.

Meeting battery demand

As the federal government incentivizes consumer EV adoption and domestic supply, manufacturers are moving their operations across the U.S. to better position themselves to capitalize on incentive programs that improve the profitability of production process. Southern U.S. states have become a hotbed for the EV industry, attracting car companies, battery manufacturers and recyclers. Many automakers and battery manufacturers are retooling production facilities, building gigafactories and teaming up to meet the demand.

Battery production is a significant component of the EV supply chain. According to the U.S. Department of Energy, by 2030, demand for batteries to accommodate the surge in EV adoption is expected to grow to nearly 2,500 gigawatt-hours (GWh) a year from 550 GWh in 2022. Finding the raw materials needed to meet battery demand is one of the industry’s greatest challenges. Expectations are even with increased recycling, over 300 additional graphite, nickel, cobalt and lithium mines will need to be dug by 2035. With the additional complication of IRA credits requiring 40% of minerals contained in eligible batteries must be mined in North America. EV manufacturers are putting a lot of resources into making deals with mining companies and battery recyclers.

Location, location, location

Site selection for manufacturers will become more crucial in the coming years given how utility-dependent battery and automotive production is. Retooling factories will require substantial capital investments, and production sites will need access to experienced labor.

Governments and manufacturers who want to stay relevant and meet the needs of their stakeholders need to move quickly. Government-backed grants, funding and other incentives are available to begin work on the infrastructure needed. For the private sector, an experienced site selector can help lay the groundwork for future success and identify the right location to operate.

“Plugged-in” is a three-part article series by Baker Tilly’s site selection and location strategy team exploring trends in EV, including tax credits and incentives, transactions, announcements, site selection considerations and more.

Read part two: EV revolution fuels Battery Belt emergence from the Midwest to the South

Coming soon, part three: How to approach site selection for your EV facility.

Electric vehicle charging in city

EV revolution fuels Battery Belt emergence from the Midwest to the South

As the market for electric vehicles (EVs) continues to grow, auto and battery manufacturers are scaling up to meet demand with manufacturing site interest concentrated in certain U.S. supply chain hot spots.


Baker Tilly helps Autel Energy find their first U.S. electric vehicle charger production facility

Autel Energy, an international company providing Electric Vehicle (EV) products and services, engaged Baker Tilly to assist in locating its first U.S. production facility.

Team of healthcare IT professionals meeting to discuss new initiatives
Next up

Baker Tilly co-authors clinical study for risk assessment tool in managing women at risk for ovarian cancer