Startups and slowdowns in EV and battery plans (2024)

BLOG Jul 26, 2024

Over the past few weeks, BEV assembly and battery plants haveopened, started construction, and been delayed, as the globalindustry adjusts to an inconsistent demand path.

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New BEV battery capacity comes online inAsia-Pacific

Inconsistent demand growth for battery electric vehicles (BEVs)in 2024 is increasingly expected to continue in 2025. As automakersbalance capital expenditure and consumer demand, a number ofbattery projects are being delayed and revised, while others aremoving full steam ahead.

On the BEV battery side, a plant between Hyundai Motor and LGEnergy Solution (LGES) has started production in Indonesia. It isthe first battery cell plant in the country, with annual capacityof 10 GWh of battery cells and supported by a US$1.1 billioninvestment announced in 2021.

On the vehicle assembly side, GAC Aion, a new energy vehiclesubsidiary of GAC Group, has inaugurated a new plant in Thailand.That plant has annual capacity of 50,000 units and saw US$65million invested. The GAC Aion plant is the second of its kind tobe opened in Thailand this month; BYD's plant opened in early Julywith capacity for 150,000 new-energy vehicles each year.

VinFast has also started construction on a new plant inIndonesia, aimed at building right-hand drive versions of the VF 3,VF 5, VF 6 and VF 7 vehicles for the Indonesian market; this plantis planned to have 50,000-unit annual capacity.

In North America, battery projects are delayed andrevised

Meanwhile, on the other side of the world, Ford and GM haveslowed ramp-up of their BEV production capacity increases. Thisslowdown is having an impact on North American manufacturinginvestments, while VinFast is finding that breaking into the US ismore difficult than expected.

After GM's CEO confirmed the company will not reach the targetfor 1 million units of installed BEV capacity in 2026, LGESindicated it will slow construction on a new battery cell plant inMichigan. LGES said that it will adjust the speed of its overallinvestments and is looking for ways to ensure its plants areflexible, comments which suggest other changes could be made. TheGM-LGES Michigan plant is an Ultium Cells LLC joint venture withGM, the third between the two in the US.

Ford has also announced another shift in its North Americanmanufacturing plans. Instead of producing the planned three-row BEVutilities for the Ford and Lincoln brands at its Oakville, Ontario(Canada), plant, Ford will start building the current-generationF-Series Super Duty truck there in 2025. As soon as 2026, the nextgeneration will be produced there as well. Ford committed toelectrified solutions for the next Super Duty, though stopped shortof committing to BEV production at Oakville.

Announcing global sales of 21,747 vehicles in the second quarterof 2024, VinFast reduced its guidance for 2024 full-year sales from100,000 units to only 80,000 units. VinFast also delayed its firstUS BEV plant to 2028; this is the second delay for a plant whichwas initially meant to see production start in July 2024.

Turkey gets BYD investment and creates potential hedgeagainst EU tariffs

Turkey's government announced that it will not impose tariffs onChinese automakers who invest locally, after imposing a 40% tariffon mainland Chinese passenger car imports. US presidentialcandidate and former President Donald Trump has said that he mightconsider a similar policy if he wins the US election in November2024.

In early July BYD reached an agreement with Turkey to investUS$1 billion into vehicle production there. SAIC is also said to bein discussions to begin production in Turkey, while Chery said inan earlier statement, "We are working intensively on thefeasibility analysis of factory construction in Turkey andproduction in Turkey together with the relevant Ministries. We arestriving to be able to produce in Turkey as soon as possible." Anyfacility constructed in Turkey could potentially circumvent tariffsimposed by European Union member states.

S&P Global Mobility sees BEV production reaching59% of light-vehicle production — in 2036

The S&P Global Mobility June 2024 light vehicle productionforecast sees production of BEVs continuing at a fairly aggressiveupward slope, even with consumer hesitation in 2024. Globallight-vehicle BEV production is expected to overtake internalcombustion engine (ICE) production in 2029.

By 2036, we see global BEV production at just 59% of alllight-vehicle production. However, we also see the potential forGermany with 97% of its light-vehicle production having shifted toBEVs by then.

In Mainland China, which will continue to be the highest-volumeproducer of BEVs, only about 64% of light-vehicle production isforecast to be BEVs by 2036. Mainland China's drive toward newenergy vehicles (NEV) as opposed to a laser-focus on BEVs leavesmore room for solutions like plug-in hybrid (PHEV) andrange-extended electric (REX) vehicle solutions; those are forecastto see, roughly, respective 17% and 7% of mainland Chinalight-vehicle production in 2036.

The US is expected to be the third-highest BEV producer in 2036;we forecast that 75% of light-vehicle production could be BEVs bythat year. Indonesia and Thailand are long-standingvehicle-producing countries, with opportunity for both the homemarket and for exports. Still, a BEV transition is expected to takea little longer there; in 2036, we forecast Thailand BEV productionat about 50% of the country's output. In Indonesia we see BEVoutput reaching 26% of production.

Though at this point, a shift to BEV-dominant vehicle productionand sales is assumed to be a "when" rather than an "if" question,we will continue to see OEMs and suppliers revising immediate plansas they balance the need to have capacity to support the shift,while not having too much too soon.

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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.