Written by: Tom Waters, Assistant Director of Startups for the University of South Florida
Electric vehicles have reached a critical threshold. While much has been written about the importance of federal subsidies, charging stations, and environmental benefits, EVs still only account for 10% of annual vehicle sales globally. The inconvenient truth is that battery technology has not kept pace with electric vehicle development.
But that is changing. Very recently, battery manufacturing has seen a rapid influx of investment. Last month alone (Feb/2023) venture capitalists invested $650 million in automotive startups; 70% of which went to battery technologies. The so-called ‘Battery Belt’ – recently opened or announced battery manufacturing sites specifically for electric vehicles – is growing.
The majority of these facilities are on the East Coast, particularly in the Southeast. One city has an array of competitive advantages to make it the ‘Buckle’ of this belt. That is Chattanooga, also known as Gig City.
The Hexagonal Buckle
It would be difficult to overstate the significant investment in electric vehicles and battery production in the region. As the map below shows, global automotive brands are working with (and attracting) battery startups to meet this demand. And it’s only getting started.
Electrification has reached into lawn care and farm tractor systems. School and municipal buses are quickly turning into electric-based platforms. Mercedes and Mack have launched electric garbage truck products. But it’s not a matter of simply electrifying a gas-powered platform. Even experienced innovators with significant engineering resources have learned how hard the EV world can be.
After several years, design and engineering pioneer Dyson decided to close its electric vehicle division. James Dyson, whose household vacuums, hair dryers, and air purifiers have won design awards for decades, had predicted his “fantastic car” would be on roads by 2020. But in the end, it was the business challenges, not technical ones, that proved overwhelming.
Tennessee is the number three producing state for electric vehicles, yet only Nissan (Smyrna) and GM (Spring Hill) are presently churning out cars. When VW (Chattanooga) and Ford (Memphis) begin full production over the next couple of years, Tennessee may very easily become number one.
Then there are the specialty EV manufacturers, like XOS trucks in Byrdstown. Supporting all of this industry infrastructure are tire makers Nokian (Dayton) and Bridgestone (Nashville), along with over 900 automotive suppliers of every size, type, and specialty.
Chattanooga, with only a small amount of effort, could be the nation’s leader in the development of this critical component for all-electric vehicles. Each of the six sides to this specialty buckle is a force multiplier to the others.
1: Internet As Infrastructure
Artificial Intelligence is improving battery design and manufacturing, making them cheaper, safer, and with higher energy density. But AI technology requires lots of computer power and fat bandwidth to assemble, access, and analyze the large data sets required to train AI algorithms.
Chattanooga has the fastest broadband internet access in the nation. Installed and operated by the city-owned Electric Power Board, Internet speeds of up to 25 gigabytes a second are already wired into every home and business in the area.
The EPB recently announced a partnership with Quibetek for the first industry-led, commercially available quantum network in the country. It is available for private companies, government, and university researchers to run experiments and develop applications on EPB’s 10,000-mile city-wide fiber optic backbone.
2: The Labor Force
The city’s manufacturing history means it knows how to build things, but an AI workforce is not the same as a blue-collar manufacturing base. Where can companies find college-educated computer, data, and materials science specialists to leverage this quantum-ready network?
According to pre-pandemic (2020) data compiled from the higher-ed data site CollegeSimply.com, Silicon Valley has a shade of over 300,000 students within 100 hundred miles; Chattanooga has over 278,000. How does that compare to the regional competition?
Chattanooga has 30,000 more students than tech darling Austin, Texas, where companies have to compete with Apple and Facebook for technology talent. It has 100,000 more than its big brother city of Nashville. Companies there have to contend with the cyber-talent-hungry headquarters for Alliance Bernstein and Amazon, which recently relocated there from New York.
3: Home, Sweet Home
The CEO of Alliance Bernstein cited housing costs as a primary reason for relocating his corporate headquarters to Nashville. If employees of big firms like this can’t afford homes, how will smaller companies compete? Fortunately, Chattanooga has the lowest cost housing of any major technology city in the Southeast.
According to Zillow, the average home price in Nashville is $175 thousand more than the average cost in Chattanooga. A home in Austin is 1.5 times the cost of a home in Nashville, and in New York doubles that cost to $722 thousand. San Francisco in turn is twice as much as New York at $1.5 million.
But ‘home’ is not just a house – there has to be something to do in the area. Chattanooga has college and pro sports, music venues and art museums, good healthcare and educational options. Spiritual and political preferences are respected, and innovation is pervasive across the city vs simply being painted on the walls.
4: River and Rail
Chattanooga has a unique geography. Vehicle battery assemblies are heavy – very heavy – and the number of train rail connections in the area is significant. Those rails connect to deep-water ports in Charleston, Savannah, and Jacksonville that can ship vehicles overseas. It also means bulk raw materials can be transported by rail to battery manufacturing sites directly.
Piedmont Lithium is one of several new firms leveraging the region’s growing EV ecosystem. It will break ground this year on what will be the largest lithium processing plant in the nation. By 2025 the plant is expected to produce lithium hydroxide for half a million cars a year.
Raw material can also be shipped into three port facilities on the Tennessee River above and below Chattanooga. With the 2022 Inflation Reduction Act requiring more EV manufacturing to be done domestically, supply chain and distribution are going to be critical to industry success.
5: The Freight Alley
That kind of logistics work is handled by specialty firms. Chattanooga has long been known as the crown jewel of Freight Alley, sitting dead center in the middle of over fifty logistics firms across the Southeast. Like artificial intelligence, supply chain work requires computer science and applied mathematics professionals.
Chattanooga’s standing as a freight leader is due to the number of interconnected highways around the city, including I-24, I-75, and I-59. A study called Thrive 2055 found that 80% of the nation’s cargo passes through Chattanooga on its way to a final destination.
Forty percent of the city’s $6.6 economic output is related to ‘logistics-dependent’ companies in manufacturing, transportation, mining, agriculture, and utilities. This has fed the area’s popularity for warehousing, cutting down the time and expense of getting products to customers.
6: Tennessee Valley Authority
The largest public electric utility in the nation is the Tennessee Valley Authority. Known as TVA, it is the fifth largest employer in Chattanooga, with a sizable downtown presence. As a federal utility it generates the region’s electricity through a mixture of coal, hydro, and nuclear facilities.
Computers running those AI and logistics algorithms are power-hungry, so cheap and reliable electricity is important. But TVA is not simply a utility provider to the industry, it is also an important and very public EV patron.
In 2021 TVA announced it would electrify half its fleet by 2030, converting 100% of its light-duty and 50% of its medium-duty vehicles to electricity. Having a federal utility taking that kind of a lead role is, once again, an advantage few cities enjoy.
Filling In Holes
Dyson’s difficulties are indicative of the challenges the industry faces. Real estate developers for example will have to include vehicle chargers (hardware, electric power, means for payment, etc.) in their projects, particularly the more exclusive ones. This will be true for condos, apartments, and single-family home neighborhoods.
Amazon’s rollout of Rivian electric vans has changed driver delivery activity. From apps that automatically zoom and scale as the driver arrives at a destination, to camera-based 360 image capture around each vehicle, to keyless entry systems – how logistics operate, particularly on the critical (and very costly) last mile of delivery is about to undergo massive change.
Those aforementioned garbage trucks, city/school buses, and electrified fleet vehicles will mean significant capital changes to city and county governments. How will they handle recharging costs, specialty maintenance, and charging facilities? There are few resources to help local government leaders be responsible for managing these efforts.
Ford recently had to halt the production of its wildly successful F-150 Lightning pickup truck in Michigan due to a problem with the battery arrays. The firm’s new site outside Memphis will produce the same vehicle, meaning any similar problem in the future will impact Tennesseans. Since 8% of the U.S. workforce uses an F-series truck in their day-to-day work activity, it could have an even bigger impact nationally.
The Tennessee Aquarium highlights the city’s reputation as an environmental thought leader. Now, with a fortuitous technology foundation and a healthy measure of topographical luck, it could benefit from one of the most significant pivots in industrial history. If Chattanooga were to take the lead across the regional EV ecosystem, it could be groundbreaking.
Being a trusted interlocutor connecting industry, academic, and government bodies, and taking a lead role in developing the region’s battery manufacturing function, will create additional opportunities. There is plenty of motivation; the EV battery industry is predicted to be a $134 billion market by the year 2027.
Wouldn’t it be something if Gig City was the trailblazer for that world?
(Map) Key Battery Belt Sites
- Mercedes – vehicle (Vance)
- Hyundai – vehicle (Montgomery)
- Hyundai – vehicle and battery (Atlanta)
- Hyundai – vehicle and battery (Savannah)
- Rivian – vehicle (Savannah)
- SK Innovation – battery
- Stellantis – vehicle and battery (Kokomo)
- Lion Electric – vehicle (Joliet)
- Rivian – vehicle (Normal)
- Ford – battery (Glendale)
- GM – battery (Brownstown)
- GM – vehicle and battery (Hamtramck)
- GM – vehicle (Orion Township)
- Ford – vehicle (Dearborn)
- Ford – battery w/CATL (Marshall)
- Stellantis – vehicle (Detroit)
- Toyota – vehicle and battery (Liberty)
- Vinfast – vehicle and battery (Chatham)
- Ford – vehicle (Avon Lake)
- GM – battery w/LG Chem (Lordstown)
- HonHai/Foxconn – vehicle (Warren)
- Proterra – vehicle
- Envision AESC – battery
- Ford – vehicle and battery (Memphis)
- GM/LG Chem – vehicle and battery (Spring Hill)
- Nissan – vehicle (Smyrna)
- Novonix – battery (Chattanooga)
- Piedmont– battery (Chattanooga)
- Pure Graphite – battery (Chattanooga)
- VW – vehicle & battery (Chattanooga)
- Ultium Cells – battery (Spring Hill)
- XOS – vehicle (Byrdstown)
- Green Power – vehicle (Charleston)
- Sparkz – battery (Charleston)