The ascent of electric vehicles (EVs) within the U.S auto market is giving industrial real estate a boost, according to a new report from Yardi Matrix.
Sales of hybrid vehicles were up more than 50% annually in October, while plug-in EV sales grew 22% annually in the same month, per Argonne National Laboratory. The strong increases contributed to more than 1.1 million EVs sold to date in 2023, leading Yardi to estimate that “millions” of square feet in new industrial space will be necessary to accommodate EV manufacturing facilities, as well as facilities for the production of batteries and other supplies.
A surge in new facilities was spurred in large part by the Inflation Reduction Act of 2022, which gives financial assistance to EV manufacturers and grants tax breaks for such vehicles built stateside. In May, Hyundai and LG announced a $4.3 billion battery plant in Georgia, then doubled down in August, disclosing an additional $2 billion investment in the complex. Toyota, meanwhile, recently pledged an another $8 billion towards an under-construction battery plant south of Greensboro, North Carolina.
The ramp-up in supplier network buildout, meanwhile, has already begun in many parts of the country as well. Epsilon Advanced Materials, headquartered in Mumbai, announced in October a new North Carolina factory to produce synthetic graphite anodes for EV batteries. The $650 million plant will mark the first investment from an Indian company in the American EV market, according to a statement from Epsilon. Another international company, Cnano Technology USA, revealed in August that it plans to invest $94.7 million into a Kansas City-area manufacturing facility for liquid conductive paste, a component also used in EV batteries.
Not all the news around EV manufacturing has been rosy, in part because of a recent slowdown in adoption. Yardi noted recent reports of EV inventories at many car dealerships building up as consumers worry about affordability and access to charging. Some companies are scaling back on their investments as a result; Ford, for example, has announced the delay of $12 billion worth of EV-related projects.
Subsequently, Yardi conceded that its short-term outlook for EV-related facilities is “a bit rocky,” but was swift to add that the emergent segment will be a driver of industrial demand in the long term. The Inflation Reduction Act, Yardi noted, “provides both a carrot and a stick,” making the impact of the EV movement on industrial real estate a factor to watch moving forward.
