The Fuse

Electric Vehicles Support U.S. Manufacturing, Jobs

by Matt Piotrowski | May 08, 2018

A higher fraction of plug-in electric vehicles (PEVs) were assembled in the United States than non-PEVs in 2017.

The benefits of electric vehicles (EVs) are well known. Driving an EV decreases the nation’s dependence on oil, reduces fuel costs over time, and cuts pollution. But did you know that most EVs on the road in the United States are also made in America? Alongside a manufacturing renaissance this decade, EVs have become a central component to U.S. manufacturing. And a new report from the Argonne National Laboratory found a higher fraction of plug-in electric vehicles (PEVs) were assembled in the United States than non-PEVs in 2017.

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In the Argonne analysis, PEV refers to any plug-in vehicle, including hybrids (such as the Chevy Volt), while non-PEV includes internal combustion engine (ICE) vehicles and those that run on fuel cells and CNG. This category also includes some hybrid models that are powered solely by gasoline, including the Toyota Prius. Dave Gohlke of Argonne says that the PEV data is based on figures from manufacturers and third-party sources, while non-PEV numbers come from the International Trade Administration and WardsAuto. Gohlke adds that when fully electric vehicles are considered on their own, approximately 90 percent are assembled in the United States.

Government investment and tax incentives over the past decade or so have been successful at not only precipitating rapid growth in EV sales but also helping spur the beginnings of a nascent industry. As a result, domestic research and development, manufacturing, and jobs have all benefited from the boom in EV manufacturing. Over 2.5 million workers are directly employed by the auto industry, while vehicle sales constitute 3.5 percent of U.S. GDP. Roughly 11 percent of auto jobs (250,000 employees) work with alternative fuel vehicles, according to the Office of Energy Efficiency & Renewable Energy at the DOE. “A vehicle’s domestic manufacturing composition plays a key role in determining its overall impact on the American economy,” writes Frank DuBois, Associate Professor Frank DuBois at the American University’s Kogod School of Business. “This knowledge empowers consumers and automakers alike to make better economic decisions about where a car is made, and which offer the greatest commercial benefits to the country.”

“A vehicle’s domestic manufacturing composition plays a key role in determining its overall impact on the American economy.”

One of the biggest success stories in the EV space includes Nissan receiving a $1.45 billion loan from the DOE’s Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, helping it build an advanced battery manufacturing plant in the United States and revamp its Smyrna, Tennessee plant. Nissan produces its all-electric LEAF at a large scale and has sold over 117,000 vehicles in the United States. The LEAF is now the third highest selling EV, behind the Chevy Volt and the Tesla Model S. An all-electric auto company, Tesla is also a recipient of an ATVM loan and employs more than 37,000 people. Its Nevada-based Gigafactory 1 is slated to reach full production in 2020 and the company expects to employ about 10,000 workers when it reaches.

In his “Made In The U.S. Auto Index” measures domestic content in vehicles, American University’s DuBois, a former mechanic, lists the Tesla Model S as the highest-ranking EV (13th overall), with 75 percent of the assembly, parts, and material produced in the United States. His ranking includes 419 models but is not exhaustive. It puts Ford’s Focus Electric and CMAX next around 70 percent, followed by Cadillac’s ELR and the Chevy Volt at roughly 66 percent. Chevrolet’s Traverse, Buick’s Enclave, and GMC’s Acadia are the highest on the overall list, with more than 85 percent domestically produced.

American content in cars has declined for several years, DuBois told The Fuse, and analyzing the data (or lack thereof) is becoming increasingly more difficult. “With the globalization of the auto industry and vehicles now having more electronics than ever, figuring out how much content is American is complicated,” DuBois told The Fuse.

There are currently more than 800,000 EVs on the road in the United States, with 49 models available for consumers from which to choose, and automakers have announced dozens of new models in the coming years. Outlooks for sales diverge widely, but more and more forecasters and experts have revised their projections upward. Tesla CEO Elon Musk said within the next decade, half of the new vehicles produced in the United States will be electric, and EV Adoption, a website that analyzes industry, government, and consumer trends, sees 3.5 million EVs sold in 2025, accounting for almost 22 percent of total vehicle sales, up from just over one percent now. By contrast, the EIA is more conservative in its reference case, saying annual EV sales will reach 1.1 million by the middle of next decade. Even though the exact trajectory of EV growth is uncertain, with more models available, combined with higher production volumes and lower battery costs, the domestic market is poised to develop significantly in the coming years, helping support the U.S. manufacturing sector and providing new job opportunities.

EV production needs a workforce with a wide set of skills

Because manufacturing EVs requires specific training and the vehicles’ systems are more complex than those with traditional internal combustion engines, the job opportunities for U.S. workers with a variety of backgrounds will grow as production correspondingly increases. Car companies require chemists and other scientists to study changing technology in electric drivetrains, electrical engineers, and software developers to develop vehicle components, workers who build the vehicles in factories, and technicians who fix vehicles. Beyond the manufacturing of the cars, workers are necessary to build charging stations, providing openings at electric utilities and in government for infrastructure development and urban and regional planning.

The U.S. is becoming an EV manufacturing hub and will continue to make the U.S. auto industry increasingly competitive as it encourages new technology, innovation, and job opportunities.

While EVs are turning into a mainstream product, their near-term success, for the most part, still depends on continued government support. Since EVs remain relatively expensive to manufacture largely due to battery costs, tax credits and other incentives remain crucial. The penetration of EVs has the potential to displace a large amount of oil demand—Wood Mackenzie said that by 2035, electrification could reduce U.S. gasoline demand by 2 million barrels per day. At the same time, the U.S. is becoming an EV manufacturing hub and will continue to make the U.S. auto industry increasingly competitive as it encourages new technology, innovation, and job opportunities.

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