Are We Ready for EV Manufacturing Growth?

At the turn of the 20th century, electric cars were popular, accounting for about one-third of vehicles on the road. And, at the turn of the 21st century, following decades of fossil fuel-driven vehicles, electric vehicles re-emerged as environmentally friendly modes of transportation.

According to CBRE’s recently published report, “Electric Vehicle Trends and Challenges for Industrial Real Estate,” EVs are more popular than ever, and significant growth is to come. The Edison Electric Institute put this growth into numbers, noting that:

• The number of EVs on U.S. roads is forecast to reach 26.4 million by 2030, up from 2.4 million at the end of 2021

• Annual sales of EVs will come close to 5.6 million in 2030, reaching nearly 32% of annual light-duty vehicles in 2030

Meanwhile, according to Statista:

• Worldwide revenue in the EV market is expected to grow by 10.07% annually between 2023-2028, resulting in a projected market volume of $906 billion by 2028

• Unit sales are anticipated to reach 17.07 billion globally in 2028

The CBRE report indicated that environmental benefits, affordability and U.S. government incentives will continue driving the growth of EVs. “Most major automotive manufacturers are developing EVs and ramping up production with multibillion-dollar EV facility investments throughout the U.S.,” the report noted. Also, plants and factories provide auxiliary products and services – like lithium-ion batteries and semiconductors – to EV manufacturers.

Yet, with the demand and expansion, CBRE analysts listed challenges as well:

Power Availability

EV vehicle and battery manufacturing requires a great deal of power. High-voltage power supply, charging foundation installation capabilities and advanced robotics and automation systems “rely on stabilized energy flow and accessibility to power,” the CBRE report said.

Labor Force Training

EV manufacturing requires technicians and electrical engineers who are specialized in this field. There are currently approximately 194,000 EV-specialized engineers, with 200,000 more needed by 2027, according to CBRE, adding that “robust training and education initiatives will be critical to address this headwind.”

Retooling Facility Design

EV operations are unique, requiring adequate space for battery storage, charging infrastructure, and maintenance. Additionally, manufacturing plants need more electrical capacity. From planning to full operation, a typical plant can take three to five years, with much construction time focused on utility installation.

Supply Chain Issues

Raw materials like lithium, cobalt and rare-earth metals are needed for EV manufacture. Half of the world’s cobalt comes from the Democratic Republic of Congo. Bolivia, Chile and Argentina have most of the world’s lithium supply. And two-thirds of all of this is processed in China. There will be pressure to mine, transport and refine these materials more quickly, which could strain the supply chain.