Power trips: Electric vehicles are emerging as the fastest-growing segment of the U.S. auto market, and Chattanooga is at the forefront

Photography by VW Media / A Chattanooga-made Volkswagen ID.4 SUV is seen on the Market Street Bridge.

Electric vehicles are the fastest-growing segment of the U.S. auto market as the number of EVs sold in 2022 was 65% higher than the prior year, figures show.

This year, Cox Automotive is projecting more than 1 million sales of EVs, up from about 800,000 in 2022, which will represent about 8% of all new vehicles sold.

Production of the batteries which act as the power plants in EVs also is growing as companies make massive investments in factories to service automakers such as Volkswagen, Ford Motor Co., General Motors and others.

Michelle Krebs, executive analyst at Cox Automotive, says the Inflation Reduction Act passed by Congress in 2022 and the infrastructure bill approved a year earlier are helping drive a transformation in the auto industry.

"It's a massive investment," she says. "Nothing in my career has been like this."

Chattanooga is sitting amid more than $30 billion of new or planned investments in EVs by auto companies and battery makers in Tennessee and Georgia alone.

Volkswagen's Chattanooga auto assembly plant launched its production of the all-electric ID.4 SUV in mid-2022, and plans to roll out about 90,000 of the vehicles in 2023. The plant employs about 4,700 employees, and the company hired about 1,000 people over much of the past year for EV and other assembly.

Last September, Ford broke ground on BlueOval City, less than a year after the company and SK On announced a planned $5.6 billion investment in its West Tennessee campus.

According to Ford, BlueOval City will create about 6,000 jobs building an all-new electric truck and advanced batteries to power future Ford and Lincoln EVs when it opens in 2025. Ford calls the new facilities its largest, most advanced auto production complex in its 119-year history; and the new plant represents one the largest single new business investments ever in Tennessee.

In November, South Korean battery maker LG Chem unveiled the biggest-ever foreign investment in the Volunteer State with plans for a $3.2 billion cathode production facility in Clarksville in Middle Tennessee. The company in 2021 already had announced a joint venture with General Motors to build a $2.3 billion battery plant in Spring Hill, Tennessee.

In December, South Korean companies SK Innovation and Hyundai Motor Group unveiled plans for a large EV battery plant in Northwest Georgia. That Bartow County project is expected to create more than 3,500 jobs and rank as the third-largest corporate investment in state history, officials say. SK already operates a huge battery plant in Jackson County, northeast of Atlanta.

Earlier this year, LG Chem committed to investing $75 million in a company that's making one of the largest single investments in Southeast Tennessee.

Piedmont Lithium is planning a $600 million plant in McMinn County to make lithium hydroxide for use in EV batteries. Piedmont President and Chief Executive Keith Phillips says about 83% of the material is now made in China.

"If we (the United States) don't control our own destiny, we'll be exposed," he says.

Phillips says plans are to start plant construction this summer and begin producing lithium hydroxide in McMinn County in 2025, and the factory is expected to initially employ about 120 people.

Also in 2022, Piedmont was selected for a $141.7 million U.S. Department of Energy grant, which Phillips says will help accelerate the new Tennessee plant.

"It's a matching grant," he says. "It's not a check up front. The funding comes as we spend money on the project."

In Chattanooga, Australian-based Novonix plans to eventually invest about $160 million and employ 300 workers at the former Alstom turbine-manufacturing plant where the company is making material for the production of lithium-ion batteries.

Novonix took over the former Alstom plant in 2021 and has grown its staff to about 100 workers, and expects to add more over time.

Novonix also is looking to build another plant to produce 30,000 tons of synthetic graphite and employ 1,000 more workers. To aid that effort, Novonix won approval last year for $150 million of project funding from the bipartisan infrastructure law.

Krebs says there's constant research going on in the battery sector so the power packs will use fewer precious metals.

"The holy grail is solid state batteries," she said, adding that technology also will cost less and produce more power.


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  photo  Photography by Matt Hamilton / The Novonix facility on Chattanooga's Southside.

  photo  Staff file photo by Matt Hamilton / Visitors applaud during the launch celebration for the Volkswagen ID.4 electric SUV at the Chattanooga assembly plant in October 2022.
  photo  Staff file photo by Matt Hamilton / Visitors take the chance to look over new battery-powered vehicles during the launch celebration for the Volkswagen ID.4 electric SUV at the Chattanooga assembly plant in October 2022.