US-Made EVs And Their Battery Needs Are Taking Advantage Of An Unclogged Supply Chain And Government-Induced Onshoring

Giving credit for a positive economic development is sometimes just as tricky as placing blame for something negative. 

That's the case regarding an uptick in onshoring, which can be attributed to an unclogging of the supply chain mess that began during the pandemic, a resignation of trusting labor in foreign markets or recent government initiatives. In any event, the electric vehicle (EV) industry is taking advantage of the developments as well as the new employees and commercial real estate construction accompanying them. 

According to ElmTree Funds Managing Director MaCauley Studdard, those two industries have opened new opportunities, especially in the Southwest and South Central regions of the country as well as some developments in Michigan. 

"For those companies, the shift from overseas is due to a more sophisticated supply chain and R&D (research and development)," Studdard told Benzinga. "There is a need for a high degree of highly sophisticated employees." 

The hope is that increased domestic supply chain capability will outweigh the benefits of lower labor wages in countries like China, Studdard said. 

Based in St. Louis, ElmTree has been focused on identifying opportunities for the build-to-suit, net-lease real estate market, which the company believes will be affected positively by new onshoring projects, including:

• SK Innovation Co. Ltd. is partnering with Ford to build a new electric vehicle and battery manufacturing campus in Stanton, Tennessee, known as BlueOval City. At full production, the plant will be capable of producing 500,000 electric trucks annually. The development represents an investment of approximately $5.6 billion, including a 3,600-acre campus that will create about 6,000 jobs.
  
• Hyundai has shown an increased appetite for U.S. production and already operates a $1.8 billion SUV plant in Alabama. In November 2022, the company also announced plans to build an additional plant in the state focused on electric vehicle battery production. 

• GM plans to build a $3 billion EV battery plant in Indiana through a joint venture with Samsung SDI. The facility will be GM's fourth battery plant in the U.S., joining planned facilities in Warren, Ohio; Spring Hill, Tennessee; and Lansing, Michigan.

In part, Studdard credits the government enactment of the CHIPS and Science Act, geared toward incentivizing companies to produce more semiconductors domestically while also strengthening the U.S. supply chain. The act will provide $39 billion in U.S. manufacturing incentives and $13.2 billion in R&D and workforce development. 

"One interesting trend is how this onshoring can eventually shape smaller markets. Like Ford moving a multibillion-dollar plant to Tennessee. That type of change can drive a lot of growth," Studdard said. 

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