Economic development officials and environmental advocates are often at odds over major industrial projects.
Not this time.
Toyota’s planned $1.3 billion electric vehicle battery plant near Greensboro will send an unprecedented charge through North Carolina’s already accelerating clean transportation industry while also contributing to the long-term goal of slowing climate change, leaders from both perspectives predicted in interviews with the Winston-Salem Journal.
“For us, the impact of Toyota’s announcement is pretty clear,” said Tim O’Connor, senior director and senior attorney for energy transition strategy at the Environmental Defense Fund. “It’s good for business, good for health and good for the environment.”
While the electric vehicle, or EV, industry’s ultimate environmental impact will be measured years down the road, its influence on North Carolina’s economy is already undeniable, O’Connor noted.
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Since 2014, companies already have invested at least $1.2 billion in EV-related manufacturing facilities and related infrastructure, according to a study by the Environmental Defense Fund and consulting firm Price Waterhouse Coopers.
Results of the study were based on reviews of public data, Securities and Exchange Commission filings, company announcements, news reports and other available information from 2014 through September 2021.
The effort identified 28 EV-related companies in 39 locations employing 11,563 workers in the state. Eleven of those companies are headquartered in North Carolina.
O’Connor noted that the limited availability of information from some privately held companies makes the data collected a conservative estimate, but added that the numbers still illustrate North Carolina’s overall strength in the EV industry.
Plugged into the future
Toyota says it will create 1,750 jobs with an average salary of $62,000 at the battery-making facility, which will be built at the Greensboro-Randolph Megasite in Liberty. The average salary for all jobs in North Carolina is $53,707.
But growth in North Carolina’s workforce tied to Toyota’s investment won’t end with employees at the new factory itself, said Chris Chung, CEO of the Economic Development Partnership of North Carolina, which worked closely with the N.C. Department of Commerce to convince the company to choose the state over other suitors.
“Traditional economic wisdom in the automobile industry used to be that if you landed the assembly plant, (component makers and suppliers) would follow,” Chung explained. “We’ve learned that with electric vehicles, the assembly plant often follows where the battery (facility) goes.”
Toyota sells hybrids and plug-in hybrid vehicles in the U.S., but none powered entirely by batteries. The company has committed to offering 15 battery electric vehicles for sale globally by 2025.
At Monday’s announcement of the battery plant, Gov. Roy Cooper made clear where he’d like to see Toyota build at least some of its electric models.
“We hope in the future everything that goes around the battery will be part of this as well,” the governor said.
In a statement accompanying the announcement of the battery plant, Toyota Motor North America CEO Ted Ogawa laid out his company’s rationale for choosing the site.
“North Carolina offers the right conditions for this investment, including the infrastructure, high quality education system, access to a diverse and skilled workforce, and a welcoming environment for doing business,” he said.
That’s the message Chung hopes Toyota’s announcement sends to an industry whose exponential growth is guaranteed by government and corporate commitments to eventually make vehicle fleets emission free.
“It’s a big signal when a company like Toyota plants its flag here,” he said. “If it works for Toyota, it probably will work for 99.9% of other companies.”
Chung added that his organization now is in discussions with at least a half-dozen other EV-related companies about locating facilities in North Carolina.
From the ground up
Despite North Carolina’s accelerating influence in the EV industry, it lags behind states like Michigan, Texas and California where energy and automotive companies had firm footholds before the shift to emission-free technology, O’Connor, of the Environmental Defense, pointed out.
“It’s much easier to modify or expand an existing facility than it is to build one from the ground up,” he said.
Makers and suppliers of non-electrical components also have deep roots in those states.
In North Carolina, existing manufactures such as Greensboro-based truck-maker Mack and High Point-based bus-maker Thomas Built are producing a combination of electric and combustible-engine vehicles, while new companies such as Arrival, which assembles zero-emission delivery vans and buses in Charlotte, started from scratch.
It’s companies such as Arrival that position North Carolina to experience a proportionally bigger economic bump from the EV transition than states such as Michigan with its long-established dominance in automotive manufacturing. That’s because electric vehicles will ultimately replace the fuel-powered models historically built in legacy plants. Companies must retool them for EV assembly just to maintain their level of production, as do many component suppliers whose survival depends on their relationship with those automakers.
The same is true for existing employees, who must adapt or find themselves out of work.
But for companies such as Arrival and Toyota, with its planned battery plant, the new facilities represent a net gain in production, employees and revenue, while also boosting local communities and the state economically.
“North Carolina is well positioned to capitalize on the continued growth of the EV sector,” O’Connor said.
Economy and environment
Even as electric vehicle production and consumption increase in the U.S., cost remains the biggest barrier to EV domination of the market.
“Batteries are easily the most expensive element of electric vehicles and why they’re more expensive,” explained Matt Abele, director of marketing and communications at the N.C. Sustainable Energy Association.
Most experts predict “price parity” — the point at which it costs the same to build electric vehicles and those with combustible engines — to be five to seven years away, he said.
“At that point, the argument against purchasing an electric vehicle really diminishes,” Abele added.
But price is only part of the equation in encouraging a larger shift to electric vehicles, O’Connor, of the Environmental Defense Fund, insisted. For the transition to succeed, lawmakers and corporate leaders must enact policies that encourage — or in some cases mandate — EV use and the installation of enough charging stations to make electric vehicles a viable option for all drivers, he explained.
It’s already happening. President Joe Biden said he wants half of all new vehicles sold by 2030 to be electric. Gov. Roy Cooper issued an executive order calling for at least 80,000 zero-emission vehicles in the state by 2025. And several North Carolina companies have set aggressive timelines for shifting to all-electric fleets.
Announcements like Toyota’s will encourage other government, institutional and business leaders to enact their own objectives for EV use, regardless of their views on climate change, O’Connor predicted.
“They can see that this is a domestic economic opportunity that adds to a pollution-reducing opportunity,” he said.
Those leaders ultimately will be persuaded if they recognize that individuals, like the 1,750 employees expected to fill the newly created positions at Toyota’s battery plant, benefit directly from the shift to EV vehicles.
“It demonstrates that it hits people where they’re at,” O’Connor concluded.