US government rolls out US$3.5 billion battery funding as manufacturers start layoffs

Peng Chen, DIGITIMES Asia, Taipei 0

The growth of EV market has slowed. Credit: AFP

The US Department of Energy announced on November 15 that it will offer US$3.5 billion of funding to facilitate domestic battery and battery materials production. The news came as some South Korean battery manufacturers have started to lay off employees at their US plants due to the slower EV demand.

The Biden administration aims to make half of all new light-duty vehicle sales be EVs by 2030 and has worked on localizing the supply chain. The US energy department said in a statement that demand for EVs and stationary storage systems is expected to grow the size of the lithium battery market by five- to ten-fold by the end of the decade. America needs to develop high-capacity batteries, including non-lithium ones.

According to the agency, the US$3.5 billion funding will be the second phase of funding provided by the Bipartisan Infrastructure Law, which US president Joe Biden signed into law two years ago.

The energy department said the subsidy will help the US establish competitive battery materials processing and battery manufacturing industries. It will also ensure the country's national security by reducing the reliance on critical materials and battery components from foreign entities of concern.

China has been the world's largest battery producer and battery material processor. According to South Korea-based SNE Research, six of the 10 world's top battery manufacturers by EV battery usage are headquartered in China.

The global EV market has seen growth decelerate due to factors like high interest rates and economic uncertainties. Carmakers such as Ford and General Motors have said they will scale back some EV investments.

According to Nikkei Asia, battery makers like LG Energy Solution and SK On have begun to let go of some employees in response to the slower demand. LGES said in a statement that it will lay off 14% of its workforce at a plant in Michigan in the next two months, citing automakers realigning the speed of the EV transition.

However, the company said it will continue expanding at another factory in Michigan to support Toyota. The pair announced in October that LGES will supply Toyota 20GWh of battery modules annually in the US. The battery company also plans to build a joint battery plant with Honda in Ohio.

Nikkei Asia reported that SK On has reduced output at a plant in Georgia, the US, and furloughed some production workers. The company said it has taken the decision to optimize line operations and workforce management.