IRA-driven battery projects face delays amid economic headwinds: report

Key battery manufacturing projects initiated in response to the Inflation Reduction Act (IRA) are facing setbacks, according to a Financial Times (FT) investigation. 

The IRA, signed into law by US President Biden in August 2022, proposed a $369 billion injection into the US clean energy economy. The industrial policy focused on reshoring manufacturing for the renewable energy transition, and significant announcements have been made for US manufacturing in batteries and materials, solar manufacturing, hydrogen, and more.

Yet the FT reports, when including semiconductor manufacturing as well, that of the projects worth more than $100m, “a total of $84bn have been delayed for between two months and several years, or paused indefinitely.” The FT notes some delays are public knowledge, while others have not been formally announced, citing interviews with more than 100 companies and state and local authorities to determine project statuses.

In terms of batteries and public announcements, LG Energy Solution’s $2.3 billion battery storage facility in Arizona is on a construction suspension after being quadrupled in March from its first announcement. Korean media reported that LG Energy Solution converted some production at its 20 GWh Michigan plant to ESS battery production lines, away from electric vehicle batteries.

Other delays are for raw materials for batteries and critical component manufacturing. Albemarle’s $1.3 billion lithium refinery in South Carolina has also been placed on hold, which it announced in March. Anovion, which makes synthetic graphite for lithium-ion batteries, delayed a $800 million battery parts factory by a year “due to lack of clarity over the IRA’s electric vehicle regulations,” says the FT, a delay not previously reported or announced by the company.

The FT cites a market downturn in EV demand, policy uncertainty amid elections, and high labor and supply costs. The delays indicate ongoing challenges in establishing a robust domestic battery supply chain.