The Chattanooga region is one of the three best sites in the United States to attract new electric vehicle equipment manufacturing and jobs as a national company cites the Scenic City's low operating costs.
Of 30 metros nationally that The Boyd Co. names as poised to woo such new investment, operating costs are the lowest in the Chattanooga area. The metro's total annual cost was put at $43,727 per employee for a 150,000-square-foot EV manufacturing facility employing 500 workers, with the location consultant calling the region the best in the central/southern U.S.
John Boyd, a principal at the company, said in an interview Wednesday that North Charleston, South Carolina, and Minden, Nevada, also are top metros in terms of low costs. North Charleston came in at $45,726 per employee annually and Minden at $47,157 a year for the same-size EV plant. San Jose, California, was the highest cost location at $62,382 per employee annually, according to the study.
"Operating costs have always been a major site selection factor," Boyd said.
But costs play an even bigger role for EVs because there's pressure on manufacturers of battery-powered vehicles to lower prices points, he said. Boyd said it's $10,000 to $20,000 more costly to build an EV compared to an internal combustion vehicle.
"So reducing operating costs is a key site selector variable," he said.
Among factors included in the study were costs for labor, electricity and natural gas, property and sales taxes, travel and amortization.
Also, Boyd raised the in-migration of people in the Chattanooga region as a factor helping raise the region's profile for EV supply equipment companies.
"Chattanooga really is a rising star in terms of secondary Sunbelt markets with respect to in-migration," he said.
Boyd mentioned the affordability of the region compared to other markets in the Sunbelt.
"We've seen this market really change over the years," he said. "There's new energy downtown."
Boyd said a live, work, play environment is a site selection theme for high-tech industries such as EV and battery research.
The company official said the presence of Volkswagen's production plant, which builds the ID.4 electric SUV, is a competitive advantage for the metro area.
"The area is a magnet for suppliers in related industries," he said. "You call that a trophy plant."
VW officially rolled out its first battery-powered SUV last October, and the automaker is projected to assemble 90,000 this year, in addition to the conventionally powered Atlas and Atlas Cross Sport SUVs.
Pablo Di Si, Volkswagen Group of America's president and chief executive, said at an October event at the 4,700-worker plant that the company will continue to bring other models to the U.S.
"The ID.4 will be a hit in the U.S.," he said. "We've just started to unlock the potential."
Boyd said Chattanooga's high-speed internet connections and Smart City corridor also offers a "living test bed" with ongoing research at the Center for Urban Informatics and Progress at the University of Tennessee at Chattanooga. Boyd said having a networked system that allows EV drivers to better find charging stations is a "really a big deal nationally" and offers another comparative advantage for Chattanooga, which bill itself as the Gig city.
Last summer, Chattanooga was awarded a $4.57 million federal grant for the testing program. Matching funds from municipal and industry partners bring the total investment to $9.2 million.
Boyd said charging opportunities will be customized for drivers as a result of the system recognizing the charge level of individual EVs, volume and pace of traffic and electric grid power demand to recommend charging stations and types by locations.
Additionally, he said the presence of lithium component manufacturers bolsters the attractiveness of the Chattanooga region.
Piedmont Lithium has proposed investing more than a half-billion dollars in a new plant in Etowah, Tennessee. In Chattanooga, 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.
The EV supply equipment market is projected to grow from $7 billion in 2023 to $100 billion by 2040, led by charge point operators which manufacture, operate and service charging stations, according to The Boyd Co.
The company noted President Joe Biden's Bipartisan Infrastructure Law has earmarked $7.5 billion for EV charging and the build-out of a national network on designated alternative fuel corridors, mostly along the interstate highway system.
Also, the Biden administration has established a program that provides $5 billion in funding over five years to help states build a coast-to-coast network of qualifying fast chargers.