Commercial Real Estate News
Demand for Electric Vehicle Manufacturing Space Jumps Across the U.S.
Driven by growing consumer demand, government goals
According to new data by CBRE, the increased adoption of electric vehicles (EV) in the U.S. has produced a surge in the new construction and leasing of EV-focused facilities, including more than $150 billion of manufacturing plant projects across 16 U.S. states.
The sector's momentum is driven by increased consumer demand for EVs and government incentives designed to boost EV sales and production in support of zero-emission goals. The U.S. aims for half of new car sales to be zero-emission vehicles by 2030, and the Edison Electric Institute projects that EVs in the U.S. will number 26 million by 2030, up from 3 million today.
Rising demand for EVs, charging stations, batteries and other components will require strategically located distribution centers and manufacturing spaces that are often near renewable energy sources. Decisions on where to site those facilities will be influenced by government incentives, labor availability and power availability.
While many EV manufacturing facilities are owned by the companies that occupy them, there has also been a pickup in the leasing of EV-specialized manufacturing and distribution space. The 15 markets that logged 1 million sq. ft. or more of leased space to EV manufacturers over the past five years include:
"We are seeing a massive commitment to the expansion of EVs from both the federal government and corporations. EVs were once considered a futuristic idea, but the time for commercial real estate investors to prepare for them is now," said John Morris, CBRE's President of Americas Industrial & Logistics. "Production has been steadily ramping up across North America as automakers in the U.S. and many other countries race to establish themselves as the leading EV manufacturers."
Demand for EV manufacturing space is heavily concentrated in the U.S.'s Midwest and Southeast regions due to logistical, economic and labor market advantages, but California and Texas also stand to see significant investment. California's Advanced Clean Cars II mandates all new cars sold in the state will be 100% zero-emission vehicles by 2035 and the state already leads the country in EV and plug-in hybrid registrations per thousand people. Texas is also well-positioned with the nation's largest EV company, Tesla, headquartered in Austin.
The ramp up of EV manufacturing is not easy. Among the challenges that developers and manufacturers face include:
- Power supply - EV manufacturing plants need high-voltage power supply, battery assembly lines, charging foundation installation capabilities and advanced robotics and automation systems.
- Labor - The industry's most in-demand job is EV-specialized electrical engineers and technicians. Robust training and education will be critical to address the labor gap.
- Infrastructure - Completing an EV manufacturing project can take three to five years. Many existing plants will be retooled to manage EV production.
- Supply chain - Manufacturing EVs requires a robust supply chain for sourcing key raw materials such as lithium, cobalt and rare earth metals.
