Ford and Korean battery partner SK On are building a complex in Kentucky as part of an automotive-construction binge in the U.S. - Christopher Otts/WSJ
ELIZABETHTOWN, Ky.—Mayor Jeff Gregory stood in the cinder block frame of what is soon to be a new fire station in his 33,000-person town.
Even before the cement dries, this small community in central Kentucky already is planning two more firehouses. A $150 million upgrade of the city’s wastewater treatment plant is also in the works, and dozens of apartment buildings are going up on former farmland.
The town is gearing up for a population boom from a pair of electric-vehicle battery factories rising nearby in rural Glendale, Ky., one of which is scheduled to start production in the coming months. Ford Motor is building both of them. Like many automakers, it is anticipating some aid from the U.S. government as it gets into the battery business.
“We have invested, banking on their success,” Gregory said, referring to the town’s preparations for the new factories.
Now, tens of billions in federal money to support more than a dozen new U.S. battery plants similar to the Elizabethtown project are at risk, as President-elect Donald Trump and some Republicans in the GOP-led Congress threaten to eliminate federal funding for EVs.
The complex Ford is building with Korean battery partner SK On is part of the biggest automotive construction binge in the U.S. in a generation, after carmakers and suppliers spent decades steering more factory work to Mexico and other countries.
A collective investment of around $133 billion is expected to create more than 109,000 American jobs, much of it at battery factories across the South and Midwest, according to data from the Center for Automotive Research. The string of battery sites stretching from Georgia up to Michigan has even earned the moniker “the Battery Belt” from some elected officials.
Helping fund these projects are federal tax credits meant to build an EV battery supply chain in the United States. The 2022 Inflation Reduction Act, President Biden’s landmark clean-energy law, set aside tens of billions of dollars in tax credits for companies that make EV batteries.
Jeff Gregory, mayor of Elizabethtown, Ky., says his community has experienced a burst of investment in anticipation of the BlueOval SK battery campus. - Christopher Otts/WSJ
The federal subsidies reduce the cost of making batteries domestically by about $4,000 per electric vehicle, based on the average battery size of EVs available in the U.S., said Sam Adham, head of battery materials research at CRU Group, a consulting firm. The government is expected to pay companies an estimated $78 billion in tax credits through 2028, with additional outlays into early next decade.
Competing with China
Some D.C. watchers and Wall Street analysts say they expect the battery funding to survive because it is nurturing U.S. manufacturing jobs, an objective shared by both parties. While no Republicans voted for the IRA, some GOP lawmakers who represent states with big EV projects have defended aspects of the law.
“These are huge investments going into places that have been the backbone of automotive manufacturing for decades,” said Albert Gore, executive director of the Zero Emission Transportation Association, which represents Tesla, Rivian and several battery makers.
At the Kentucky state capitol in Frankfort, Ford officials in 2021 said they would build a pair of EV-battery plants in Glendale, Ky. - Timothy D. Easley/Associated Press
Trump said on the campaign trail that he wants to scrap the IRA, although that would require congressional action. Tesla Chief Executive Elon Musk, the president-elect’s close adviser, has said he would like to see all federal subsidies for EVs eliminated.
A spokeswoman for the Trump transition team said the president-elect would support the auto industry, both gas-powered cars and EVs.
Some automakers laid out their plans to get into the battery business before the IRA had been floated, during a burst of consumer and investor enthusiasm early this decade. But EV demand has slowed, and executives say they need the federal subsidies to help erase heavy losses.
Batteries are by far the most expensive component of an electric vehicle, and that heavy cost has kept most automakers’ EV businesses in the red. Ford, for example, had been on track to lose about $5 billion on its electric-car business in 2024.
General Motors said it received about $800 million from the IRA battery credits in 2024 and expects bigger sums in coming years. The federal subsidies are part of the company’s plan to turn a profit on EVs, said GM Chief Executive Mary Barra in December.
If they are eliminated, “it’ll be just additional work we need to do,” she said during a media event in Detroit in December. GM hasn’t disclosed how much it is losing on EVs. It expects to shrink its losses by $2 billion to $4 billion in 2025.
BlueOval SK, the Ford-SK partnership, has been on a hiring blitz as it prepares to launch the first plant. - Christopher Otts/WSJ
Auto lobbyists are making the case to lawmakers that federal support for EVs is needed as part of broader industrial policy to prevent the U.S. industry from falling further behind China, which has emerged as an EV powerhouse.
“We are in an intense global competition for automotive assets,” said John Bozzella, president of the Alliance for Automotive Innovation, which represents carmakers.
‘Full steam ahead’
Outside of the Detroit automakers, foreign-based car companies such as Honda Motor and BMW are also plowing money into new factories, along with battery makers themselves.
Hyundai Motor recently opened a $7.6 billion factory near Savannah, Ga., that makes EVs and batteries. The Korean automaker said it would work with the Trump administration on policies that support U.S. factories and supply chains.
Toyota Motor plans to soon open a $14 billion battery hub in North Carolina. The Japanese automaker says it will make batteries for EVs and plug-in hybrid vehicles, which qualify for the IRA subsidies, along with ones for conventional hybrids, which aren’t eligible.
A spokesman said Toyota doesn’t base investment decisions on government subsidies, and that it supports U.S. efforts to secure a battery supply chain and create jobs.
In Kentucky, the fragility of the EV market is evident at the Ford site, where two plants have been built side-by-side. Ford has put the second plant on indefinite hold, citing weaker-than-anticipated demand for electrics.
BlueOval SK, the Ford-SK partnership, has been on a hiring blitz as it prepares to launch the first plant, which will employ 2,500 in all. Local officials are convinced both plants will eventually come online, providing all 5,000 promised jobs.
“It is full steam ahead,” said Daniel London, head of a local economic-development agency.
Mickey Townsend, 55 years old, recently left her job packing orders at an Amazon warehouse and will soon join the battery plant as a production operator. The $21-per-hour starting pay at BlueOval SK represents a good raise, she said.
Townsend said she doesn’t believe in electric vehicles, but Ford’s multibillion-dollar investment gives her confidence the job will last.
“I just don’t see them putting that kind of money out, and then not being able to keep on going,” she said.
