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What makes the US a top location for gigafactory production?

Gigafactories are growing – and the United States is positioned to play a key role in driving sustainable battery manufacturing.

According to Capgemini’s report, The resurgence of manufacturing: Reindustrialization strategies in Europe and the US, 54 percent of global automotive, battery, and energy organizations say the United States is top location for gigafactories when compared to other regions, like continental Europe, the United Kingdom, China, and other emerging economies.

But what makes the US an attractive option?

US regulations provide incentives for gigafactory production

Battery manufacturing has been gaining momentum in the United States over the last several years. In 2021, American automakers announced investment of $36 billion in building facilities dedicated to manufacturing EVs and batteries. In the first five months of 2022, automakers announced $24 billion in EV-related investments, almost double the value announced in the same period of the preceding year.

The Inflation Reduction Act (IRA) capitalized on this momentum and accelerated transportation electrification in America. According to Capgemini research, other factors that make the US a favored location for gigafactories include:

  • Tax credits and incentives from the U.S. Internal Revenue Service. The Advanced Manufacturing Production Tax Credit (AMPTC) and Advanced Energy Project Investment Tax Credit (AEPITC) have reduced the cost of manufacturing high-performance batteries 30 percent on average. This has resulted in more gigafactory announcements in the US.
  • Consumer tax credits. Credits vary based on the battery capacity of the vehicle and gradually phase out as manufacturers reach a predetermined sales volume, with up to $7,500 in tax credit for EVs with a battery capacity of at least 16 kWh. (The credit amount decreases with lower battery capacity.)
  • State-level incentives, preferential loans, and other forms of support. Many US states offer rebates and tax deductions to make the transition to electric vehicles more attractive, like direct cash rebates upon purchasing an EV, waiving of sales tax or registration fees for EVs, allowing EVs to use high-occupancy vehicle (HOV) lanes, even with a single occupant, and discounts on monthly electricity bills.
  • Access to mineral resources. The International Energy Agency (IEA) predicts a substantial increase in global mineral demand by 2040, driven by EVs and battery storage. North America holds a significant advantage in this industry, owing to its abundant mineral resources.

US gigafactory production: A collaborative effort

Organizations are opting for collaborative approaches when it comes to establishing gigafactories. Of the global organizations in automotive, battery manufacturing, and energy industries which are currently building or planning to build one or more gigafactories, 93 percent are establishing all or most projects through joint ventures or partnerships with other organizations.

According to Capgemini research, companies placing big bets on gigafactories in the US include:

  • Tesla, with gigafactories in Nevada, New York, and Texas
  • General Motors and LG Energy Solution with their joint venture, Ultium Cells.
  • FREYR Battery, a Norwegian organization specializing in clean, next-generation battery-cell production, is setting up a gigafactory in Georgia for its multi-phase Giga America clean-battery manufacturing project.
  • Toyota, which in 2023 announced an $8 billion investment in its North Carolina battery plant that will create around 3,000 jobs at its Toyota Battery Manufacturing gigafactory.

Learn more about the future of reindustrialization and manufacturing by downloading the full report: The resurgence of manufacturing: Reindustrialization strategies in Europe and the US

For more information on Capgemini’s gigafactory capabilities and client success stories, please fill out the form below.

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