Can nearshoring deliver cleaner automotive supply chains? 

A range of factors—including COVID-19, geopolitical instability, and natural disasters—have compelled automakers to reconsider the risk profile of their existing battery supply chains. The industry’s overdependence on a single region or supplier, particularly for components such as batteries and semiconductors, is inherently risky.  

In recent years, there has been a substantial rise in nearshoring as automakers seek to bring their supply chains closer to home. Ford has committed US$2.2bn to the construction of an electric vehicle (EV) battery plant in Michigan, although this has been reduced from an initial sum of US$3.5bn. In January 2024, Tesla announced plans to construct a battery plant in Nevada that will augment existing production at its Austin gigafactory. Both companies currently depend on China’s CATL for the majority of the lithium iron phosphate (LFP) batteries used in the vehicles they sell within the US.