The emerging geography of electric vehicle production on North America

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Recently many carmakers have announced substantial investments in both battery electric vehicle (BEV) assembly plants and battery plants in the United States. This paper examines the extent to which the rapid growth of BEV production impacts the existing geography of motor vehicle production in North America. Our analysis shows that most BEV carmakers have embraced the prevailing geography of clustering in auto alley.
The forces shaping the geography of internal combustion engine (ICE) vehicle assembly and powertrain (engine and transmission) production are well understood. In light of the rapid growth of the market for BEVs, the production geography for that part of the industry needs to be examined: what role do agglomeration effects and economies of scale play in shaping the emerging geography of BEV vehicle assembly and battery production?
This paper focuses on investments in BEV and battery production facilities in North America. Most North American ICE vehicle and engine assembly plants are clustered in auto alley, a region extending south from Detroit to the Gulf of Mexico. The battery pack and BEV final assembly plants currently operated by the legacy carmakers as well as those of most of the upstart carmakers also cluster in auto alley. We find that battery pack production facilities show signs of the same strong co-location that ICE powertrain plants have had with final assembly plants. Carmakers tend to manufacture battery packs either themselves – as is the case with ICE engines – or in joint ventures with battery suppliers.
Auto alley emerged as the optimal location for production of ICE vehicles in order to minimize distribution to the national market. The extent to which the distribution of BEV production ultimately follows ICE production into auto alley or disperses to nontraditional locations depends principally on the distribution of the BEV market. If California continues to account for a large percentage of total U.S. BEV sales for many years into the future, then locating production facilities in or near that state, rather than in auto alley, would be consistent with the auto industry’s prevailing economic geography principles of agglomeration economics and economies of scale. On the other hand, if the future distribution of BEV sales soon mirrors the current national distribution of ICE sales, then auto alley is likely to remain the center of the U.S. auto industry.