US battery plants canceled

As the US electric vehicle battery industry matures, less viable projects are starting to fall by the wayside. Over the past few weeks, three start-ups canceled plans for US battery plants.

Earlier this month, Freyr announced the sale of a site in Georgia where it was going to build a battery factory. In January, iM3NY’s plan to manufacture lithium-ion batteries in New York vaporized when the company went bankrupt. And Kore has canceled plans for a battery plant in Arizona, according to local media report.

The plant cancellations come in the first weeks of Donald J. Trump’s presidency. Trump and Chris Wright, who was recently confirmed as head of the US Department of Energy, have indicated that they plan to roll back government support for clean technology offered during the Biden administration. In a secretarial order from Feb.5, Wright says the DOE will review its support for R&D to ensure that it prioritizes funding for fossil fuels and nuclear, geothermal, and hydropower technologies.

The canceled battery plants had all been counting on government support. Freyr decided in 2023 to focus on its project in Georgia rather than a facility in Norway partly because of tax credits available through the Inflation Reduction Act (IRA). In June 2023, Kore received a conditional commitment for an $850 million loan backed by the DOE. iM3NY had been applying for the same type of loan before its bankruptcy.

While Trump administration policies spell a change for the battery industry, Michael Sanders, a battery industry analyst with the research firm Avicenne Energy, says the recent project cancellations are primarily due to shaky technology and a lack of customer support.

“All three were very weak on the technology side,” he says. “They’re not building their plants because they didn’t have a competitive product.”

The Australian Securities and Investments Commission accused executives of Magnis Energy Technologies, iM3NY’s main financial backer, of hiding the New York plant’s difficulties in achieving large-scale manufacturing. Before focusing on its US project, Freyr struggled to iron out issues with its manufacturing process at a facility in Norway.

Kore’s Arizona project made it through a DOE due diligence process to get a conditional loan commitment, but the company still had to raise about 30% of the $1.25 billion price tag from other investors, a daunting task for a start-up.

Evan Hartley, a battery industry analyst with the research firm Benchmark Mineral Intelligence, says that Freyr was trying to manage many projects at once. In addition to battery projects in Europe and the US, the company completely shifted directions by acquiring a US solar company in November. “One of the reasons that contributes to these challenges is that you stretch yourself too thin,” Hartley says.

Hartley doesn’t see the cancellations as a bad omen for the US battery industry. Instead, he says it’s the beginning of a weeding out of weaker projects. But while US battery cell manufacturing is progressing, he says production of battery components, such as cathode materials, still faces obstacles in the US due to waste management concerns and competition from cheap materials from China.