Above: The Rivian plant in Normal, Illinois, is being expanded so it can build 215,000 units per year
July, 2024- “We gonna rock down to Electric Avenue, and then we’ll take it higher.” So goes the chorus in the 1982 pop/reggae song released by Guyanese-British musician Eddy Grant. North America’s automotive supply chain is about to rock electric vehicles at a pace that could not be envisioned a mere five years ago.
The latest Original Equipment Supplier Barometer, based on a firstquarter 2024 survey of members of the Motor Equipment Manufacturers Association, found that many companies are benefiting from the shift toward higher battery electric vehicle (BEV) adoption.
“Innovation is being driven by new customers and technologies, despite overwhelming skepticism that OEMs will achieve quoted BEV volumes and rising cost pressures,” the barometer report states.
Surveyed suppliers said they expect it will still take five to 10 years for BEV production to reach 25 percent of global vehicle output. Regionally, suppliers expect a 25 percent share of BEV production to occur first in China, followed by closely by Europe, with North America taking about eight years to reach that threshold.
SOME SKEPTICISM
Researchers at S&P Global, a financial intelligence firm, say that recent data points and shifting market sentiment “suggest that the electrification of vehicles may take longer than once thought,” and that has “steadily reduced” the medium term forecast for BEV penetration “while keeping a more stable expectation for 2030.”
Based on data compiled in May 2024, S&P researchers said that in their base case scenario, 40 percent of global light vehicle sales will be BEVpowered cars and light commercial vans by 2030. That represents a forward average growth rate of around 20 percent from 2023, with BEV sales levels at nearly 10 million units (or 11.7 percent of 85.5 million in worldwide light-vehicle sales).
S&P analysts noted that electrification is expensive for automakers and suppliers. “This takes the form of increased research and development expenses and capital costs such as new plants, supply chain reconfiguration or retooling. It is also seen in increased variable costs where vehicles require additional technological content.”
Toshihiro Mibe, president and CEO of Honda Motor Co., shakes hands with Justin Trudeau, prime minister of Canada, at Honda of Canada Manufacturing
EV VALUE CHAIN
Caution at the 30,000-foot view aside, major automakers that operate factories across North America—and their component suppliers—are working feverishly to meet current and future consumer demand for emission-free vehicles.
Honda Motor Co. Ltd. plans to build a comprehensive EV value chain in Canada. The estimated capital expenditure of Cdn. $15 billion includes investments by joint venture partners. The purpose is to strengthen its EV supply system and capability to prepare for a future increase in EV demand in North America.
In late April, Honda said it had begun to evaluate all the requirements to build a Honda EV assembly plant and a stand-alone Honda EV battery plant in Alliston, Ontario. The proposed Honda EV value chain will include a cathode active material and precursor processing plant through a joint venture with POSCO Future M Co. Ltd. and a separator plant through a joint venture with Asahi Kasei Corp.
Honda expects to start up EV production in 2028. Once fully operational, the Alliston plant will be able to assemble 240,000 cars per year, and the battery plant will have a capacity of 36 GWh per year. Honda positioned its existing production plants in Ohio as its EV hub for production, including the retooling of existing plants, an investment of U.S. $700 million. It also will build a joint venture EV battery plant with LG Energy Solution, an investment of U.S. $4.4 billion.
The Ohio EV hub will serve as the foundation for future EV and EV battery production, sharing knowledge and expertise with other Honda plants in North America, including Alliston. Honda expects to begin producing EVs at Marysville, Ohio, late next year.
As a second step in this initiative, Honda will strive to establish a comprehensive EV value chain that includes all aspects of EV production in Canada, from the procurement of raw materials mainly for batteries, to the production of finished EVs. “Honda is making progress in our global initiatives toward the realization of our 2050 carbon neutrality goal,” says Toshihiro Mibe, global CEO of Honda. “We will strengthen our EV supply system and capability with an eye toward a future increase in EV demand in North America.”
NEW CLASS
BMW Group’s plant in San Luis Potosí, Mexico, is gearing up for production of the Neue Klasse model. Construction of a high-voltage battery assembly operation began in early May, along with expansion projects for the body shop, assembly and logistics areas. A total of 800 million euros will be invested in expanding the Mexican production site.
The high-voltage battery assembly at San Luis Potosí is key to integrating the Neue Klasse at the production site.
“The battery assembly in San Luis Potosí will be part of our global production network. For our new sixth-generation e-drive alone, we are building five locations on three continents,” says Milan Nedeljković, member of the board of management at BMW AG responsible for production. “Locating battery factories close to vehicle manufacturing makes production more resilient.”
In addition to San Luis Potosí, assembly sites for sixth-generation highvoltage batteries are also being built in Hungary, China, the United States (South Carolina) and Germany. As well as integrating battery assembly in Mexico, the company will add 215,000 square feet of manufacturing space to the body shop and 107,000 square feet of space for assembly and logistics. BMW’s Neue Klasse model will be produced in Mexico from 2027 onward.
BMW Neue Klasse
BATTERY SEPARATORS
Asahi Kasei, based in Tokyo, plans to build a $1.6 billion EV battery separator plant in Port Colborne, Ontario. The company will install its proprietary Hipore battery separator technology there. Separators are one of the four key components of lithium-ion battery cells (alongside anodes, cathodes and electrolytes). Acting as a physical barrier between the anode and cathode, the separator helps to maintain thermal stability and safety within the battery cell.
TOYOTA’S BEV BOOST
Toyota said April 25 that it is preparing for assembly of a three-row battery electric SUV in the U.S. as part of a new $1.4 billion investment in its Princeton, Indiana, factory. Plant infrastructure will support building the BEV and a battery pack assembly line using lithium- ion batteries supplied by Toyota Battery Manufacturing North Carolina, a $13.9 billion facility slated to begin production in 2025. In February, Toyota pledged to spend $1.3 billion in Georgetown, Kentucky, to support a future BEV assembly line there. ThThe additional investment will create a battery pack assembly line at the factory, with batteries being again being supplied from the planned North Carolina facility.
SUPPLIER BAROMETER
What are your biggest challenges/opportunities as the industry prepares for a battery electric vehicle (BEV) future?
NEWCOMER
Rivian Automotive Inc., founded in 2009, plans to expand its existing factory in Normal, Illinois, in order to produce its R2 midsize SUV there. The company learned in May that it won an incentive package from the state of Illinois valued at $827 million. ThThe funds from that package will go toward expansion of the plant, improvements in public infrastructure and job training programs for Rivian’s workforce. The expansion will allow the company to build 215,000 EV units per year: R1S, R1T, R2 and commercial delivery vans.
Rivian R1S G2
Tool installation at the Ohio Assembly Plant is scheduled to begin in the second quarter of 2025.
DELAY FOR FORD
Ford Motor Co. said in April that it is retiming the launch of upcoming electric vehicles at its Oakville, Ontario, assembly plant while continuing to build out an advanced industrial system to produce its nextgeneration EV. This work includes greenfield construction and conversion of existing assembly plants.
Ford is working to build a full EV lineup while serving customers with the right mix of gas, hybrid and EVs based on current demand. Ford is simultaneously expanding its hybrid EV offerings. By the end of the decade, the automaker expects to offer hybrid powertrains across its entire Ford Blue lineup in North America.
During the first quarter of 2024, Ford’s EV sales increased by 86 percent, and hybrid sales rose 42 percent versus the same period in 2023.
The comprehensive overhaul of the Oakville Assembly Plant from a gas vehicle assembly plant into an EV manufacturing complex was slated to begin during Q2 2024. The market launch of Ford’s three-row EVs at Oakville is being pushed out to 2027 from a previous expectation of 2025. Ford hopes the additional two years allows for the consumer market for three-row EVs to further develop, and enables the carmaker to take advantage of emerging battery technology.
The BlueOval City campus, which includes an EV assembly plant, is progressing on track, Ford says. In addition to paint shop and vehicle assembly equipment, machines are being installed to produce the sheet metal stampings for Ford’s next electric truck.
Ford expects to begin customer deliveries of the new truck in 2026. In Avon Lake, Ohio, Ford is building out EV assembly capacity and expects to begin tool installation during the second quarter of 2025.
MORE POWER
Volkswagon ID.4
Volkswagen Group’s battery company subsidiary, PowerCo SE, has begun construction in St. Thomas, Ontario, for a Cdn. $7 billion cell gigafactory. Sebastian Wolf, PowerCo SE’s COO, says the company will equip VW’s BEVs in North America with unified cells, a new technology designed for cost-efficient scale production.
St. Thomas will be able to produce up to 90 GWh in the final expansion phase. ThThe cell factory projects production will start up during 2027. ThThe PowerCo facility will support the introduction of a broad portfolio of VW brand full-electric vehicles in the United States and Canada by 2030, the company says.
SURVEY SAYS
Fifty-eight percent of surveyed automotive suppliers (members of the Motor Equipment Manufacturers Association) expressed uncertainty about whether OEMs are achieving their quoted BEV program volumes (see table, page 25). Thirty-one percent expressed uncertainty about the rate of adoption and acceptance by fleet owners (car rental agencies and other commercial users). Twelve percent of survey respondents said they are capitalizing on the BEV trend while 14 percent say BEVs are changing the way they conduct business. Thirteen percent of surveyed MEMA members said their products are not aligned with BEV model production but only 8 percent say they lack a clear vision of how to proceed in this evolving market. Let’s hope that a great majority of the metals supply chain has the vision to adapt to electric platforms as soon as possible.
