Why labor shortages pose 'serious challenges' to US battery supply chain

Editor’s note: This is part four of a five-part feature series on global battery supply chains. The reporting borrows from a new season of The Big Switch called “The Great Battery Boom,” produced by Columbia’s Center on Global Energy Policy and Latitude Studios. Listen to episode four below, or find the show anywhere you get your podcasts.

The U.S. battery supply chain faces “serious challenges” with a labor shortage that will likely intensify as the demand for batteries grows, according to a report from the Center for Automotive Research, or CAR. 

The organization surveyed 158 professionals in electric vehicle- and battery-related industries and found that 82% of respondents reported shortages of skilled local applicants. Respondents were mostly in North America and included people in executive leadership, training, economic development, and academia.

“The two big takeaways from this report really come down to the fact that the employers need more skilled applicants. So it's about volume and it's about having the appropriate skills,” said CAR industry analyst Lisa Krusemark, who led the research team behind the report.

The labor shortage adds to existing challenges facing the U.S. battery supply chain, including shortfalls of critical minerals, which threaten the decades-long cost declines in clean energy technologies. 

In the report, CAR found the largest shortages in the upstream parts of the battery supply chain, like mining and refining, followed closely by downstream steps like battery cell manufacturing and pack assembly. The skills in shortest supply were chemistry, chemical engineering, battery management systems, and other skill sets that require a college or graduate degree.

The report was funded by Argonne National Laboratory and conducted in partnership with Li-Bridge.

Retaining skilled workers was also a major concern, with 40% of employers naming it as a challenge. The report names competition with other industries as one cause, as well as the geographic mismatch between jobs and skilled workers; 51% of respondents have difficulty recruiting employees due to “relocation resistance.”

“We’re seeing a lot of partnerships between automakers and battery manufacturers that are popping up,” said Krusemark, alluding to large joint-venture projects like Ford and SK On’s Blue Oval City complex in Tennessee. 

“They're developing these massive facilities. We need to make sure that there's education and training that's being developed in those areas or there are hands-on training facilities that are being co-located because [as] we start needing hundreds of jobs, we need to make sure that there’s some correlation with the geographic location of industry.”

Labor market tightens while EV investment picks up 

Labor shortages within the U.S. battery supply chain are part of a larger shortage across the country’s economy. 

“The United States currently is extremely employed,” said Sam Jaffe, director of business development for current-collector company Addonics. Jaffe previously spent more than a decade as a battery-industry analyst. 

“Here in North America by far the biggest problem is availability of labor,” Jaffe said. “We do not have a significant manufacturing base in North America, or at least in the United States, that has lots of excess workers who are looking for a job, who have experience.”

For the past two years, the U.S. unemployment rate has hovered around 3.5%, with February 2024 up only slightly to 3.7%. A 2021 survey from Deloitte and the Manufacturing Institute found that 77% of manufacturers anticipated struggling to retain workers. 

Meanwhile, investment in battery factories, mines, and refineries has grown rapidly, spurred by the Inflation Reduction Act and rising global demand for electric vehicles. Automakers announced more than $110 billion in battery-cell factories, car-assembly plants, and other EV-related investments in the U.S. between 2018 and 2022, according to CAR. But these new battery factories and mines are finding it difficult to find the people to run them.

‘We fell asleep at the wheel’

K. Venkatesh Prasad, senior vice president of research and chief innovation officer at CAR, argues that the U.S. could have been better prepared to handle the acute labor shortage within the battery supply chain.

“Where we...fell asleep at the wheel was the fact that basic investment takes about two to three decades from a public-sector standpoint for any big change to happen,” he said. Prasad argues that development of the lithium-ion battery industry diverged from other tech sectors in the U.S, like biosciences and the Internet, which were both catalyzed by federal funding. 

“There wasn't that sustained public investment for a number of reasons, and China and Japan made a lot of those investments on the public sector side so the private sector could then take off and do work.”

But these labor challenges extend beyond the United States. Even Japan and Korea, which each manufacture about 1% of the world’s batteries, are facing labor shortages. Japan has plans to train 30,000 additional workers in the battery sector by 2030. And South Korea’s LG Energy Storage is investing in secondary education to help address an impending skilled labor shortage. 

Prasad said that the battery industry needs to invest in training for early- to late-career employees, and even for children that aren’t in the workforce yet.

“If you're a CEO, you're trying to look at workforce transformation,” Prasad said. “I'm investing in this plant. I've got this $8 billion plant investment. It's going to be around for 30 years. Who's going to be part of that workforce in the 20 years out from now for the final 10 to15 years of that? And those people are in kindergarten now.”

“So the time to influence, the time to educate and train is right now. It's today.”

Aligning curricula with industry

That sort of education and training are not yet happening at a broad scale in the U.S: “There's more work to be done,” said CAR’s Krusemark. 

Respondents in the CAR report named three strategies — aligning education and industry, providing on-the-job training, and continuing education — as their top priorities to address the labor shortage. 

Krusemark pointed to a handful of organizations that are developing curricula that meet industry needs, like Binghamton University, The Electrochemical Society, and the transport-focused non-profit SAE. 

Southern states have been especially successful in attracting EV investments partly due to their focus on workforce development, said Wall Street Journal auto reporter Nora Eckert.

“The South has done a really great job of preparing this robust system of technical colleges and pumping out skilled workers who are attractive for these companies.”

Automakers announced $33 billion in EV-related investments between January and November 2022, according to CAR. Two-thirds of that went to southern states, which had invested in robust workforce development programs.

Georgia, for example, has its Quick Start skills training program.

“Georgia Quick Start is a program that sets up training facilities right next to automotive assembly plants,” Eckert said. “So this could look like building almost like a mock assembly line where workers can be trained on the specific jobs they'll need to do on the plant. And then this again helps with speed. So the minute that this EV manufacturing facility is up and running, these workers are already trained on how to do their jobs, and they can hit the ground running.”

Krusemark emphasized the need to take a comprehensive inventory of what training resources are available. 

“So I think the next step following this assessment is to really get an idea of what is out there and catalog it as thoroughly as possible,” she said, “and then try to look at the gaps.” 

Want to dig in further? Listen to the fourth episode of “The Great Battery Boom” with Dr. Melissa Lott, as she explores the complexity of battery supply chains, from mining to manufacturing.

Transcript

Melissa Lott: Last time on The Big Switch…

Tom Moerenhout: You get crude oil out of the ground, you can't put that in your tank. It's very similar for critical minerals. It's a rock, right? So you need to process that into something that can be used in industrial applications.

Sam Jaffe: The most important material that goes into the battery is the cathode powder, and the cathode powder starts with metal salts made out of nickel, manganese, cobalt and lithium.

Rebecca Tan: Indonesia, it has nickel, it has oxide, it has cobalt. It very much believes that these EV minerals can help do to it what oil once did for parts of the Middle East.

Sam Jaffe: There's a lot of materials, so we're really talking about somewhere between 10 and 20 separate industries.

Rebecca Tan: You end up with a huge amount of waste that if it's not managed and handled properly can have pretty devastating effects for the environment and for the local communities.

Tom Moerenhout: So the question is what do you do about it?

Melissa Lott: Most of us don't think of battery manufacturing as a dance, but that's how Sam Jaffe describes it.

Sam Jaffe: I think that the battery factories themselves are the most interesting because a modern battery factory is all robotics. There's very few people on the factory floor and it looks like a ballet is going on.

Melissa Lott: Sam has worked in the lithium ion battery industry for about two decades. He first worked as a journalist and then as a market analyst, and today, he works for a company called Adionics, which makes parts for lithium ion batteries. It's fair to say he's watched this industry for 20 years from a lot of different angles, and he's someone you want to talk to if you want to understand what's going on.

Sam Jaffe: These battery cells are shooting by you on the assembly lineup. They're going so fast, it's a blur.

Melissa Lott: He's talking about the factories that make battery cells. That's the part that actually stores the energy.

Sam Jaffe: Everything is perfectly choreographed so that everything is working at the exact same rate, and somehow, they pull it off and keep those things running highly optimized over the entire three shifts of the day.

Melissa Lott: Battery factories like the one that Sam's describing run around the clock. They churn out millions of cells to meet growing demand for batteries, and it's a demand that we've covered a lot in this series so far and the market that's working to meet that demand is expanding really quickly. But this battery factory dance and the specific steps that are used to make the battery cells, it's a bit of a secret because battery manufacturing is a cutthroat industry these days.

Sam Jaffe: Most cases, nobody's getting inside that factory without a pass or permission from very high up people. You can't just walk in there and go look at the factory line.

Melissa Lott: But in this episode, that's exactly what we did. We toured a lithium ion battery factory in upstate New York to peak at its assembly lines, and we're going to show you how these batteries, similar to the one that we broke down in episode one, are made at scale. We're also asking where a small factory in upstate New York fits into the global battery manufacturing industry, an industry that's currently dominated by one major player.

Sam Jaffe: It's big in China and nowhere else, put it that way. So China has developed a lithium ion battery industry over the last decade that is enormous, and they'll import the raw materials, the actual raw commodities and go through the multiple processing steps all the way up into making the batteries, and in many cases, putting them into the cars there.

Melissa Lott: We need lithium ion batteries to decarbonize the world's cars and power grids, and over the last 10 years, China has been the world's biggest supplier of those batteries, but that's starting to change.

Nora Eckert: There's been about $110 billion in announced EV investment.

Melissa Lott: And that investment is changing towns and communities from Michigan to New York to Georgia in some dramatic ways.

Nora Eckert: Oh, our local population is expected to grow from 400 people to 10,000 people. It's incredible.

Melissa Lott: For workers in the US auto industry, the move towards EVs is sparking conversations about labor and job security.

News clip: For the first time ever, the United Auto Workers Union is striking against all big three US car makers simultaneously.

Nora Eckert: The EV transition is in the background of every union discussion right now.

News clip: We are the union, the mighty, mighty union.

Melissa Lott: This is The Big Switch, a show about how to rebuild the energy systems that are all around us. I'm Dr. Melissa Lott, and I'm the senior director of research at Columbia University's SIPA Center on Global Energy Policy. This season, we're digging into batteries. From cars and heavy equipment to the electric grid, they're finding their way into everything around us, but scaling up battery production to meet the demands of a net-zero economy is complicated and contentious. In a complex battery supply chain, we're asking what gets mined, traded and consumed on the road to decarbonization, and what are the impacts and trade-offs?

This is the fourth installment in our five-part series. Up to now, we've talked about the bottlenecks in battery supply chains, things that could hold the energy transition back, like the impacts of mining on indigenous communities and the environmental impacts of processing facilities. But in this episode, we're focusing on a step in the supply chain that is booming - manufacturing. It's a boom that means big changes for jobs, communities and geopolitics. So how did we get here? Do y'all remember back in episode one when Dan Steingart and Brett Schumacher broke down a battery cell?

Dan Steingart: The idea that the cell that Brett is taking apart for you today would be the commodity cell, when I was Brett's age 20 years ago seemed impossible. But through just brutally efficient engineering, it turned out to be the linchpin for enabling low cost storage,

Melissa Lott: And that's exactly what we're talking about today, the batteries sell, specifically the giant factories that make them and what the rapid build out of those factories means for the global economy. And just like about everything else we've talked about when it comes to lithium ion batteries, the story of this industry's explosive growth over the past decade starts with one country, China.

Sam Jaffe: So they have developed and scaled up the industry that until China got involved about 10 years ago, was still a specialty device industry that was essentially making batteries for laptops and cell phones.

Melissa Lott: When Sam Jaffe first started his career in batteries, the industry was in its infancy and batteries were used in small consumer electronics with really tiny battery cells.

Sam Jaffe: Up until 10 years ago, the vast majority of batteries that were made were a little bit bigger than a AA battery, or if they were pouch batteries, they were a little bit bigger than let's say a packet of cigarettes or something like that.

Melissa Lott: But then folks started to realize that you might be able to use them for bigger applications like in cars or on the grid, which meant they needed to store more energy in those batteries.

Sam Jaffe: Making a battery cell that's more the size of a paperback book or even an encyclopedia book is a very different process, and that's around that time that the industry started adopting that is when the Chinese battery industry was born and developed. So they've developed into an enormous industry, nearly 10 times the size that it used to be, and along with creating an entire supply chain there.

Melissa Lott: Basically, Chinese companies got in the game early. They developed the right manufacturing technologies at the right time, building an industry that started from scratch in the 2000s. By 2022, according to the International Energy Agency, China was manufacturing more than three quarters of the world's battery capacity in terms of gigawatt hours. But there was a company outside of China that thought, "Wait a sec, we can do this ourselves." This company wanted to do something that was kind of crazy 20 years ago. They wanted to make their own batteries and mass produce a fully electric car, and by partnering with the battery maker, Panasonic, they did it.

News clip: It is my honor to announce that we have reached an agreement with Tesla Motor Company that will enable Tesla to build the world's largest and most advanced battery factory right here in the Silver State.

Sam Jaffe: Essentially, Elon Musk and the team at Tesla decided, "Hey, let's do this and let's do it in America," 10 years too early. They did it the most expensive way and without any incentives and built an enormous battery factory that was the size of the rest of the industry combined almost, as well as a car factory as well as figuring out how to make EVs. And essentially, they showed this can be done in America. They showed that there's ways of doing it cost competitively with China, and for whatever criticism you want to put at their feet, they are responsible for essentially kick-starting this whole industry.

News clip: Until now, Teslas were luxury cars reserved for the wealthy, some with six figure price tags, but with the Model 3, the company hopes to bring electric vehicles to the masses.

Melissa Lott: Today, every major automaker is selling electric vehicles or has big plans to, which is why EVs and hybrids make up the vast majority of lithium ion battery demand. The other two buckets, consumer electronics and stationary storage, like the home batteries that keep the lights on when the grid goes down or the shipping container size batteries on the grid that provide backup power on a large scale. And it was Tesla through its partnership with Panasonic that really launched the lithium ion battery revolution in the US.

Sam Jaffe: I think Tesla, the emergence of Tesla and the creation of a battery factory in the United States by Tesla laid the framework for what the United States government decided to do later. They said, "What if we get involved and we help to subsidize this and help to guide it happening?" And that was essentially the birth of the what later became known as the Inflation Reduction Act or the IRA.

News clip: This bill is the biggest step forward on climate ever, ever.

News clip: Nearly $370 billion including tax credits for solar panels and electric vehicles. The White House says this will cut greenhouse gasses 40% from their 2005 high by the end of the decade.

Melissa Lott: You've heard about the Inflation reduction Act. It's the US' biggest climate bill to date, and there are a lot of reasons why US policymakers passed this bill in 2022, but one of the big ones was that they saw the energy transition as a huge economic opportunity, not just for batteries but in wind and solar, hydrogen and all the other technologies that we need to reach net-zero. But those policymakers were also thinking about diversification. We talked in episode one about why we're relying too on any one country for something that you really need like gas, oil, or in this case batteries, is concerning. Well, like we said before, China manufactured over three quarters of the world's lithium ion batteries in 2022.

Sam Jaffe: And I think that the rest of the world, both Europe and North specifically, looked at this and said, "We need to recreate that for this brand new industry that's going to become a dominant part of our economy over the next 10 years." And the IRA is an enormous law. There's lots of things in there, but there's a section on building out a battery industry and it includes several hundred billion dollars worth of loan guarantees to guarantee the loans of factories involved with batteries and electric vehicles. It involves tens of billions of dollars worth of direct grants to the construction of factories. It also involves a direct subsidy to electric vehicle car buyers, which in the end, is going to be about $7,500 per car for people that qualify for it. And among the conditions of that $7,500 is a requirement that the materials that went into the battery pack and the other components of that car be made in North America, in the US, Canada, or Mexico.

Melissa Lott: Which brings us back to the battery production dance that Sam talked about at the top of the show. In factories across the United States, there's this rush to get in on the growing market for batteries and the lucrative subsidies for them.

Keith Hoge: So right around the corner here, we'll get you your safety goggles and your vest, and then we will start from the beginning of the process.

Melissa Lott: This is Keith Hoge. He's the director of sales and marketing at iM3NY. It's a battery manufacturer in Endicott, New York that is just starting to ramp up. The company primarily makes batteries that are used in stationary storage for utilities, but they're hoping to expand into electric vehicle batteries too.

Keith Hoge: So this factory that we're in right now has a name plate capacity of 1.2 gigawatt hours per year. We are ramping up to that volume. As we expand, we expect to achieve 16 gigawatt hours per year of production here on the Huron campus.

Melissa Lott: iM3NY is kind of a small fish in a big pond. Some of the big fish in that pond are China's CATL and South Korea's SK On. They have plants that have a capacity of 20 to 25 gigawatt hours per year, and some new ones under construction will be as big as 86 gigawatt hours per year. So iM3NY's 1.2 gigawatt hours per year, well, it's pretty small.

Keith Hoge: So one of the things that we, IM3, aren't able to enjoy that a company like CATL or EVE Energy or others that have been in operation for decades now is economies of scale. So we have higher input costs, and as a result, we in some regards aren't able to be as financially competitive as some of the bigger players. With that said, there are certain advantages that we have being a domestic cell supplier, namely through things like the inflation reduction act that those larger players can't leverage. So the hope is that those advantages outweigh the disadvantage of being a relatively small manufacturer.

Melissa Lott: iM3NY wants to be a bigger fish, so they're applying for a $700 million loan from the US Department of Energy to expand from the 1.2 gigawatt hours per year to 16. And like Keith said, iM3NY has this ace up its sleeve. As a US-based company, it will likely qualify for tax credits through the Inflation Reduction Act, but while they work to expand production, they're making batteries right now. Keith took producer David Fox on a tour.

Keith Hoge: So we are going to start off the tour at the beginning of the process, which is the mixing of cathode and anode slurry.

Melissa Lott: Do y'all remember the materials that came out of processing, things like cathode and anode powder which were made from what was mined all over the world, things like lithium, nickel and other minerals? Well, that's getting mixed.

Keith Hoge: Yeah, you could think of this as a big KitchenAid mixer essentially.

David Fox: I'm wondering what you can tell me about where the materials that go into both the anode and the cathode are sourced from.

Keith Hoge: Yeah, so really throughout our supply chain, there is a big emphasis on sourcing as much of your raw materials from North America and specifically the United States. We've qualified a supply base that is about 70% North American.

David Fox: And do any of the materials that are involved in your specific supply chain come from China?

Keith Hoge: We have an entirely ex-China supply chain. There is some amount of production equipments that came out of China. As you all know, China is really the leading country when it comes to battery production, so it's really tough to build an entirely ex-China supply chain when you're talking raw materials and production equipment given that they are at the forefront of battery technology today.

Melissa Lott: After they mix the two slurries of cathode and anode powder, they then coat each of those slurries onto these really thin sheets of metal, then those coated sheets go into an oven of sorts. The cathode in particular is really sensitive to the environment so this part of the process is tightly controlled.

Keith Hoge: So we'll go into the first room, then we'll need to ensure that both doors are shut. We'll go into the second room, then ensure that both doors are shut before we finally enter the dry room itself.

Melissa Lott: All right, so at this point, we've coated the cathode and anode material onto metal foil and we've pressed it into these long thin spools. We've then baked those spools in an oven and cut them into flat pieces which are about the size of sliced bread. Next up, assembling.

Keith Hoge: I can picture it. Maybe a good way to describe it, it's kind of like an accordion shape almost. If you were to imagine if you're stacking up a deck of cards and you're wrapping a cloth in between the stack of cards.

Melissa Lott: The cloth that they're describing is what's called a separator. This is basically like thicker Saran wrap and it keeps the anode and cathode from touching.

Keith Hoge: We put a single card down, then you lay out a long length of cloth, put another card down on top of the cloth and fold the cloth over that card you just placed down, and then place another card and fold the cloth over that card you just placed down and you keep on doing that. That's really the best I could do in describing that without seeing it.

Melissa Lott: And once you have enough cathode and anode sheets all stacked up, the whole thing gets rolled into what's called a jelly roll or what I called a fruit rollup in episode one.

Keith Hoge: The jelly roll is what is going to be inserted into the can itself.

Melissa Lott: That can with the jelly roll inside, well that's a battery cell, but we're not done. Those cells have to get tested and then they get charged and discharged, and finally, they just have to sit there and age a bit, kind of like fine wine.

Keith Hoge: And then there's a final aging step. About two weeks, the cells have to sit and rest, if you will. If you think about it, we're manufacturing an electrochemical component so you're dealing with live chemical reactions. We need to make sure that any reactions that might be occurring within the cell have settled before we send them through that final quality inspection and deem the cell good to ship to a customer.

Melissa Lott: And before they're completely ready to go into a car or a home battery or maybe a utility scale battery, well the cells have to get assembled into a larger pack. It's kind of like a pack of beer or a case of wine. Now, imagine the same process happening on a massive scale at factories in China, Korea and the United States. The biggest players in the world are mind mindbogglingly large complexes, and as those big factories pop up in new places, they can have huge implications for the community surrounding them.

Nora Eckert: There's a Dollar General, there's a couple of cemeteries and there's a barbecue joint, and that's basically Stanton.

Melissa Lott: This is Nora Eckert, and we heard her voice briefly at the beginning of the show. She's a reporter for the Wall Street Journal and she covers the US auto industry, and right now, she's talking about this town called Stanton, Tennessee.

Nora Eckert: It's sort of like rolling hills, a lot of farms, a really beautiful area.

Melissa Lott: It's also about to be home to something called BlueOval City, which is Ford's new electric vehicle and battery manufacturing plant.

Nora Eckert: This manufacturing facility, the assembly plant was constructed with the vehicle that will be made there in mind, so it's actually built around the assembly line for this next generation truck, electric truck that Ford is building, and they're really moving at a breakneck speed to build this facility.

Melissa Lott: When you think about the number of workers that's needed for a plant like this, compared to the size of Stanton, Tennessee, it is staggering.

Nora Eckert: This BlueOval City plant is going to need around 6,000 workers to make it run. Some of these sites are as large as 60 football fields, so they're really massive. And for reference, the town where this manufacturing complex is based has about 400 people, so this is 15 times the local population in terms of workforce needs.

Melissa Lott: All this growth means that Stanton's mayor Allan Sterbinsky has had to go from focusing on small town issues to big city concerns in a hurry.

Nora Eckert: Before Ford came to town, Allan Sterbinsky was worried about bringing the local farmer's market back, filling in potholes. Now, he has to think about, gosh, do I need to establish a local police force? How am I going to get 5,000 new housing units built? How am I going to establish a school in Stanton? There's all these concerns that would not have been on the table for a town this size before Ford came to town. So I think it's a time of a lot of anxiety and also excitement, because the town has also, according to a lot of the members there, it's been in decline for several years, and really for decades, they've been losing population. And this is really a shot in the arm for them, for their local businesses, for everyone in the community really.

Melissa Lott: The bottom line here is that building all of these factories means big economic changes for the surrounding communities, many of which are like Stanton. Thousands of new jobs, a quick increase in population, more tax revenue for local communities, but other challenges too. And it's not just Stanton. These types of factories are popping up all over the world with big concentrations in places like Poland, Germany, Hungary, Korea, India. But the country that has the most production behind China is the United States.

News clip: Much of this is clustered into about eight states stretching from Michigan down into the Southeast, a part of the country now known as The Battery Belt. Many of these states are red ones where Republican lawmakers rarely mention climate change and even oppose the climate legislation that's now supercharging US battery manufacturing.

Sam Jaffe: We're seeing a battery belt happen between, I would go as high as Toronto or as Ontario down through the Midwest, through the traditional car industry of Michigan, Indiana, Ohio, where much of the car manufacturing is located, and even lower into Tennessee, Georgia and South Carolina and North Carolina. So that entire belt area of the United States is seeing most of the factories being sited in that area.

Melissa Lott: This investment is mostly driven by car companies that are partnering with battery companies. So for the BlueOval City complex near Stanton, we're looking at a joint venture between Ford and the South Korean battery maker, SK On. We've talked about how US policymakers passed the Inflation Reduction Act and how that has loads of incentives for companies in the battery supply chain that set up shop in the United States or one of its trading partners. But a lot of these investments like the Blue Oil City complex predated the Inflation Reduction Act. There's actually this much bigger shift happening which is driven by the auto industry.

Nora Eckert: There's a ton of investment in the auto industry and these companies can throw a billion dollars around and not bat an eye it seems like, but this is a lot of investment, even for automotive.

Melissa Lott: Nora is talking specifically about the 110 billion in investments that car and battery companies in the United States have announced between 2018 and 2022. According to the International Energy Agency, consumer spent nearly 400 billion on electric vehicles in 2022, so it makes sense that car companies are leading the charge. What's interesting to note in the United States is that half of the 110 billion has ended up in Southern states, like Tennessee where Ford is building the BlueOval City plant in Stanton.

Nora Eckert: There's a few reasons that the South has landed a lot of these investments. One is you just need available space, you need mega sites, and there have been a lot of those available in Southern states. Automakers are increasingly worried about speed to market. They really want to get vehicles produced as quickly as possible to remain competitive, and if sites are ready to go, shovel ready, then those are super attractive. Speed is the number one factor for companies now when they're considering sites. There's also questions around what sort of access do we have to ports and to railways, which the south has a really established network of. And one of the changing factors that is becoming more and more prominent in discussions around EV investment is workforce because these plants need thousands and thousands of workers to make them hum, so the South has done a really great job of preparing this robust system of technical colleges and pumping out skilled workers who are attractive for these companies.

Melissa Lott: These are the types of things that I think about when it comes to the energy transition, this huge switch that is happening. The net-zero economy, which is not just batteries, but it's all kinds of other technologies like wind and solar, nuclear, hydrogen and so many more. Well, they all mean really real economic opportunities, but they also mean economic changes, and change is hard. And for the US auto industry, these changes are coming at a particularly volatile moment.

News clip: The sounds of support along Michigan Avenue in Wayne to go along with union leaders rallying UAW rank and file on day one of this strike.

Melissa Lott: In September of 2023, tens of thousands of members of the United Auto Workers or UAW went on strike.

Nora Eckert: The union is trying to secure better wages, better work-life balance, and ensure that members get the same pay for the same work. On the other hand, the automakers are trying to keep their costs as low as possible because they're funneling so much money into the EV transition.

Melissa Lott: The strike raised a question. Can we rapidly build out electric vehicle and battery supply chains in a way that is equitable for the workers who might be affected by it?

Sanya Carley: Auto manufacturing has been a really big driver, sorry for the pun, of economic development in the Midwest and across the entire United States.

Melissa Lott: This is Dr. Sanya Carley of the University of Pennsylvania. She co-directs the university's energy justice lab and she studies the people who built the energy system that we use today, like coal miners and other fossil fuel workers. To understand the impact of growing battery and electric vehicle supply chains on auto workers, we need to understand the history of auto factories in the United States. It's an industry that we associate with the Midwest, but like Nora and Sam said earlier, it's increasingly moving south.

Sanya Carley: The history of the auto industry in these communities, it hasn't always been glamorous, and in fact, I think it's actually been quite checkered over time. A short synopsis of the past 100 years or so is that when the auto industry has done well, it's been a great contributor to local economic development through well paying jobs and community economic development, but when it hasn't done well such as during certain recessions, or more recently, during a period of increased automation of auto industry manufacturing, we've seen, we've observed quite acutely that workers in the surrounding communities have felt the pain.

Melissa Lott: There have been difficult periods of downsizing and layoffs in the auto industry, but one acutely painful time for auto workers was the recession of 2008 and 2009. We referenced this historic moment in our first episode, and it helps to explain the strike that happened in September of 2023.

News clip: Sales at Ford are down 19% this year. GM sales are up 20, and Chrysler, down a staggering 26%. And with GM alone burning through a billion dollars a month, there is a very real fear that without help, there may be no American car makers in the future.

Melissa Lott: This was a time when people were worried that the US auto industry might completely collapse, and so auto workers accepted some pretty severe changes to help keep the companies afloat, including slashing wage increases and eliminating cost of living adjustments. Given that history, Sonya and her colleagues, Jennifer Silva and David Knewski wanted to understand how auto workers and the auto communities think about the transition to electric vehicles.

Can you talk me through how y'all went about talking to workers and capturing those stories? What was your approach?

Sanya Carley: Sure. So our approach was to conduct focus groups and we conducted focus groups in six different locations across the Midwest - Detroit, Michigan; Flint, Michigan; Lordstown, Ohio; Lima, Ohio; Toledo, Ohio; and Kokomo, Indiana. And these are all places where there is some kind of presence historically of auto manufacturing, and all of them are undergoing some kind of recent changes affiliated with the move from the internal combustion engine to the electric vehicle. And the people with whom we spoke included current auto workers, retired auto workers, community members who lived around the factories, as well as managers within the companies.

Melissa Lott: And what types of different stories, do you have one or two from those focus groups that kind of stick in your head? Just where you went, "Whoa."

Sanya Carley: Oh, many of them to be honest, but one I think that really stood out is an individual who talked to us about how they had devoted their entire lives and their bodies, including their knees, to the industry. And they had worked for it for so long, and they had sacrificed so much and proven their loyalty that they believed that they had earned the right to build the next American car, that they were the ones that should be making the electric vehicles if that was the direction that the company decided to go in.

Melissa Lott: And that is the direction that two of the big three automakers are headed. GM announced that it's going to stop making gas powered engines by 2035, and Ford is aiming for 50% EV sales by 2030. And it's not just auto companies that are pushing for electric vehicles. President Joe Biden wants to cut US emissions in half by 2030, and transportation is the country's single largest source of emissions. The EPA has proposed some rules that could significantly raise fuel economy standards for passenger cars and trucks, and the agency estimates that this would boost electric vehicle sales from about one in every 10 cars sold today to over six in every 10 cars sold by 2032. In short, we're seeing big changes coming for internal combustion engine supply chains. I'm talking about the people who make the spark plugs, the pistons, the fuel injectors, all of the many sub industries that live inside of the internal combustion engine industry itself, and this has big implications for those workers.

Sanya Carley: We picked up such strong sentiments of distrust, distrust that they will be able to buy an electric vehicle themselves but also a very deep distrust that they will be included in the transition as an employee. And so here, the thinking is that it will require fewer jobs to make electric vehicles than it will to make internal combustion engines, and therefore, they will likely be laid off or require to skill up but maybe not provided the opportunity to skill up, and that they'll be essentially replaced.

Melissa Lott: In this uncertain environment, concerns about what electric vehicles and batteries could mean for existing workers has spread. In particular, existing auto workers think about this claim.

News clip: It says EV manufacturing is all about making assembly easier using fewer parts, which would result in job loss for traditional auto workers.

Melissa Lott: EVs require fewer parts than internal combustion vehicles, and so some experts say that they therefore require fewer hours of labor to manufacture. The commonly repeated claim is that electric vehicles require 30 or 40% fewer hours to build, and that makes some intuitive sense, right?

K Venkatesh Prasad: If you do a part count, you might find that you have far fewer parts in the electric vehicle system than you might have on the internal combustion engine system.

Melissa Lott: This is K Venkatesh Prasad, the senior vice president of research at the Center for Automotive Research, conveniently named CAR. He talked to us about how this idea that electric vehicles require less labor to build might be a myth.

K Venkatesh Prasad: Kind of counterintuitive, so the intuitive one might say, yep, fewer hours. Fewer parts, fewer hours. The counterintuitive analysis really is that you don't count just the assembly hours. You count what it takes to manufacture the big components that go into those final assembly stages, just like you would take the number of hours it takes to build an engine, for example. So in the case of batteries, you really have to widen the lens with which you convey your narrative, and so when you start doing that, you see that you have to manufacture batteries. To do that, you have to manufacture modules, packs, and for that, you have to be able to manufacture cells. For that, you have to be able to do all the upstream chemistry, the mineral processing to get the right kinds of materials, so you can't discount all that. And that may not happen in a traditional final assembly kind of a stage or a pre-assembly stage, but it is happening in the direct value chain that leads up to these electric vehicles.

Melissa Lott: Prasad says that when you do the math, when it comes to manufacturing electric vehicles, there's really not a big difference in the total hours between combustion engines and EVs.

K Venkatesh Prasad: We've done a pretty good analysis of the US manufacturing footprints and not worldwide, so I can say that based on CAR's data, the Center for Automotive Research, the data, the numbers are pretty close, so they're a wash.

Melissa Lott: Other analysis supports CAR's conclusion that EV and battery manufacturing will not mean less labor. One Carnegie Mellon study suggests that we actually might need more labor in EV and battery supply chains, but we won't know the exact numbers until the industry starts operating more factories. And the reality is that while the total number of labor hours might stay the same or even increase, the types of jobs required will change. Remember all those sub-industries that make spark plugs and pistons? Well, electric vehicles will have more people making batteries and motors, and this extends across the whole set of industries related to internal combustion engines. I'm talking about the people who change oil and deliver gasoline to gas stations. What can we do to help workers feel and be included in the transition so that they aren't feeling left behind or out of the loop or in this scary situation where they're not sure what's coming next?

Sanya Carley: Sure. I think there's a lot of things we can do. One is from a procedural justice angle, I think including people in decision-making processes or at least including them so that they're aware and there's not so much uncertainty is very important, and that's throughout the entire process. It's not just bringing them in at the last stage where we tell them if they have a job or not. They should know, they should be able to plan for their future, so inclusion in the process is really important. And I think thinking deeply about what kinds of programs could be made available, and some of these are government programs, some of it's subsidies to help factories develop and thrive, but some of it is also industry based where industries can set up different programs to re-skill, retrain their employees to ensure that they do have a job going forward.

Melissa Lott: We have a whole bunch of policies and programs that we could use to help auto workers and all the other workers on the front lines of the energy transition to deal with the changes that we're seeing in our supply chains, but for right now, a resurgent UAW is shaping the workforce for EV and battery supply chains in the US.

News clip: We have breaking news to tell you about Ford Motors and striking auto workers have reached a labor deal.

News clip: A tentative agreement calls for a 25% pay hike over the next four and a half years. It goes over 30% when you add in cost of living adjustments. They're also reducing the number of wage tiers, a big push by the UAW, and there's more profit sharing for retirees.

News clip: General Motors has agreed to include electric vehicle battery production in its new contract. Auto workers have long expressed concerns about this shift towards electric vehicles because a large percentage are made with non-union labor.

Melissa Lott: So when we look at EVs at a high level, it appears to be this huge moneymaking opportunity and it feels like that money is, I don't know, in this big pie and everybody wants a slice. So automakers, they want to make profits and they also want to use their revenues to invest in the transition with all this competition that's going on in the EV market. And then workers want those revenues to pay for better wages and conditions. We hear a lot about good, well-paying jobs. And then consumers, they want high quality, affordable EVs, EVs that you're not having to make a massive choice between, "Okay, I'll pay a lot more upfront and I'll make it back over time," but actually having just more affordable options for more people to provide more access. So how do we think about balancing all these different priorities if we want what is not only an energy transition but a just energy transition?

Sanya Carley: That's such an excellent summary of many of the tensions and many of the trade-offs, and I think that moving toward a decarbonized future, which I would add as yet another one of these priorities is the need for decarbonization. I think that moving towards a decarbonized future requires a deep grappling with all of these trade-offs and a balancing across them, because there is no silver bullet, there is no easy this is the direction kind of solution.

Melissa Lott: Nora Eckert is a bit more blunt about this and has a slightly more critical view.

Nora Eckert: So what's clear is that not everyone could win here. If the workers secure the sorts of wage increases and benefits that they want, there will be less money for the automakers to put into EVs and they probably will become less competitive than they currently are with Tesla. Of course, they can find other ways to confront that, to slim spending in other parts of their business, but in the short term, it will be difficult for them to continue transitioning their lineups to EVs at the speed and capacity that they'd like to.

And then as a side effect of this, you have the consumer angle. We already know that the early adopters for EVs are sort of fitting out and that this next wave of customers really cares about price, and that's why we've seen a bit of a shift in demand. And if the automakers aren't able to scale their EV capacity, their production capacity at the rate that they want to, it is going to affect what they're pricing these vehicles at and it's going to keep prices higher. So this will have ripple effects, not just for the companies but for prospective EV buyers.

Melissa Lott: The UAW points out that labor is only four to 5% of the total cost of the cars they make at GM, Ford, and Stellantis. That last one is the parent company of Chrysler. And so the UAW argues that given that the big three automakers have had recent record profits, they could afford to pay for better wages. But it is also true the demand for electric vehicles hasn't been as high as the big three US automakers had expected, which could have implications for how quickly they move to build batteries and battery manufacturing facilities. And higher labor costs, just like higher mineral costs, could mean more expensive batteries and cars, which could put EVs out of the reach of more households, forcing them to buy a car that runs on gasoline or diesel instead.

And every time that someone buys a new fossil fuel car instead of an electric vehicle, we are baking more greenhouse gas emissions and also air pollution into the system, because each of those fossil fuel cars will be running for the next 10 to 20 years and that's a lot of emissions. So every time a family can't buy an electric vehicle, it's like this missed opportunity in the energy transition. And that's why prices, wages, and the intricacies of EV and battery supply chains really, really matter.

But there are some bright spots shining through this story. One of them is that electric vehicle sales in the US are still growing incredibly fast, at about a 60% annual growth rate. That's based on the last six quarters of sales data from Argonne National Lab. And according to the research firm, Alex Partners, electric vehicle companies have committed over $600 billion to electric vehicle and battery supply chains from 2023 to 2027. Basically, we have some serious momentum here and communities around the US and the world are reckoning with the changes that that momentum is already bringing. I asked Sam Jaffe to lay out his best and worst case scenarios for battery manufacturing in the future.

Sam Jaffe: I think that the best case scenario, and let's talk about North America first, is that the IRA works, and in 10 years time, the IRA is designed to essentially self expire in 2032, and we end up with a domestic battery and electric vehicle and stationary storage industry that is self-supporting. I think the worst case scenario is that it turns out that the IRA is not enough and that something within that supply chain doesn't get built and requires a foreign supplier. And if we're relying on a country to produce that for us and then we have geopolitical problems with that country, it could lead to chaos in the domestic battery industry.

And then I think the other problem is labor availability. The United States currently is extremely employed. We have very low unemployment and there's going to be a critical shortage of people with manufacturing experience. Hopefully, it's solved by paying people more so that they do choose to work there and then everybody wins. It needs to be solved.

Melissa Lott: So what happens once we're actually using all of these lithium ion batteries and then those batteries reach their end of life and no longer hold a charge? That's up next in our final episode in this series where we dig into recycling and the end of life for batteries.

The Big Switch is produced by Columbia University's SIPA Center on Global Energy Policy in partnership with Latitude Studios. If you appreciate the reporting and storytelling that we're doing here, you can rate and review the show at Apple and Spotify, and you can also send a link to a colleague or a friend who you think would like it. You can find all of our back episodes along with this current season, wherever you get your pods.

This show is produced by Daniel Woldorff, Mary Catherine O'Connor, Anne Bailey and Stephen Lacey. David Fox contributed to reporting. Anne Bailey is our senior editor, and Sean Marquand wrote our theme song and mixed the episodes. A special thanks goes to our Columbia team, Harry Kenard, Natalie Volt, Kyu Lee, Jen Wu, and Liz Smith. And Tom Moerenhout for fact checking. The show is hosted by me, Dr. Melissa Lott. Thank you so much for listening. Stay tuned for the final episode of this series coming next week.