The Emerging Battery Belt

When states’ economic development authorities are fortunate enough to land an electric vehicle (EV) manufacturing plant or battery plant, they are quick to tout the large number of jobs the investment will create in the plant itself, as well as the suppliers the plant will attract and the workers they in turn will hire.

“The rise of EVs matters because it stimulates demand in manufacturing and logistics real estate,” CBRE noted in a recent article on the topic. “Tennessee, Kentucky and Georgia, the buckle of the Battery Belt, are positioned to benefit, as well as some Midwestern areas, particularly in Michigan.” The Battery Belt now extends from Detroit to Georgia, CBRE noted.

If the new plant is near a port – like the $5.4 billion EV plant South Korea’s Hyundai Motor Group is building in Bryan County near Savannah on a the 2,923-acre megasite with capacity to build 300,000 vehicles a year – the effects may be even greater. A significant share of the cost — $4.3 billion – will go into building an adjacent EV battery manufacturing plant.

In combination, the effects have spilled into many counties, as suppliers and their customers hunt space for warehouses and distribution centers, pushing up rents and land values. Georgia’s original estimate of $1-billion in additional new investment from the assembly plant was blown through in months.

Georgia also illustrates CBRE’s point about the role of southeastern states in the EV battery pipeline. Rivian, the EV truck company, is building a large $5 billion factory in Georgia, while South Korean company, LG Energy Solutions, will construct the Hyundai battery plant in Bryan County. SK Innovation is nearing completion of an EV battery plant in North Georgia. Its sister company, SK On, will build a battery assembly plant near an existing Kia factory in North Georgia which is being converted for EV manufacture. Another Hyundai subsidiary, Hyundai Mobis, is to build a battery module plant in Montgomery, AL.

CBRE points out that battery plants tend to be located near the car factories they serve or near railways, thus driving the emergence of the Battery Belt. That’s because batteries are very heavy and expensive to ship. Lower electricity costs needed to process raw materials like graphite and lithium, especially in the Southeast, are another factor, along with high manufacturing employment growth. 

However, technology hubs also offer advantages. “Producing high-value batteries also requires a lot of R&D support and specialized machinery, which stands to benefit high-tech hubs like San Francisco and Boston as well as Detroit, which is a major center for mobility R&D,” CBRE stated. “Traditional tech hubs may also see an uptick in lab and office space demand.”

EV sales have grown “spectacularly” over the past decade, CBRE noted, adding that generous federal subsidies for consumers who buy them are intended to have EVs account for half of U.S. auto sales by 2030. It cites Argonne National Laboratory/U.S. Department of Energy statements that the goal is to expand North American battery plant capacity by 370% by 2025.

If these predictions are validated, the states affected will have even more to celebrate.