The Georgia Manufacturing Extension Partnership (GaMEP), a program of Georgia Tech’s Enterprise Innovation Institute, works with companies in manufacturing to increase their competitiveness through technical assistance and training. In addition to being an associate director, senior project manager, and the group manager for strategy, leadership, and technology at GaMEP, Mike Stonecipher also chairs the Atlanta chapter of the Society of Automotive Engineers (SAE), which covers Alabama and Georgia. Stonecipher has been following the evolution of the electric vehicle (EV) industry in Georgia, and below he shares some trends he’s observed.

Can you give us an overview of automotive manufacturing nationwide?

This year, the automotive industry is on track for about 16 million vehicles in production, and about 8.4% of those are electric vehicles.

When we speak of electric vehicles, you generally hear the term BEV, for battery electric vehicle, and there’s hybrids, such as PHEV, or plug-in hybrid electric vehicle and HEV. About a year and a half ago, EV numbers broke through the 5% mark, so there was a pretty good growth curve with early adopters. Even though it’s still at 8-plus percent, sales have slowed down, and inventories are growing.

Which category of battery has emerged as the leader?

This year it looks like hybrids are outselling the battery electric vehicles, and there’s a perception that these vehicles can serve as a technology bridge until we get the necessary infrastructure in place. There are a lot of players in this field. We don’t hear about all of them in the States, but China’s really making strong inroads on electric vehicles. BYD Auto is probably one of the global leaders, as is Tesla.

EVs represent a heavy capital investment in terms of design and manufacturing. Tesla wasn’t profitable in this until they started producing around 50,000 units per quarter. For a lot of startups, that’s a pretty big hill to climb. But then you have existing original equipment manufacturers (OEMs) with healthy bank accounts that can put millions and millions of dollars into manufacturing, stay with it, and get to the other side.

What are the numbers like in Georgia?

That 16 million represents everything in the U.S. — predominantly internal combustion engines (I think pre-COVID, it might have been more like 17 to 18 million). But the Southeast typically represents about 1/3 of that number, or maybe more.

So, the industry is growing, but the sales are not supporting the rate in which we’re manufacturing electric vehicles currently. Is that disproportionately affecting smaller startup companies that don’t have the money behind them?

Right. With the inventory growth, the larger producers are now looking at price concessions, which used to be kind of a side note. Tesla was categorized as a luxury vehicle, and that designation was really based on technology more than luxury. When they started to reduce the pricing, they were reclassed to more of a mid-range to increase sales.

Do you think EV manufacturing is going to slow in Georgia?

Well, it’s moving forward, but overall, many manufacturers have pivoted to not be 100% EV. They’re going to do more hybrids. The EV market is slowing down, and hybrids — both plugin and a non-plugin version — seem to be what consumers are moving toward.

Is that because of a fear of not being able to find places to charge EVs?

Yes. It’s what we call range anxiety. Even though the charging infrastructure has grown, the problem is that many of the charging stations typically have 25% of their chargers in disrepair and not functioning, and there’s not a lot of infrastructure support to maintain those systems. Lots of businesses have chargers, but these companies aren’t like your typical gas station, which have to make sure the pumps function. Instead, you’ve got charging stations that are not completely tied to an on-site support system.

Are there companies that will benefit from the new EV plants moving in? And, if so, will it be because they’re EV or will they benefit from just having more automotive companies in Georgia?

Yes, and yes. Take, for example, the Hyundai facility near Savannah; there’s a 7 to 8 job multiplier for each job in that facility. It’s not just adding jobs in the local supply chain to support the manufacturing. It’s also the housing, the restaurants, and the schools. The benefits are directly related to the product and indirectly related to the growth of that. When you have to bring on 5,000 to 6,000 people, that’s pretty big — bigger than most towns in Georgia.

What does that mean for manufacturing companies? It sounds like if you’re in an area that does have huge job growth, you’re going to have to work harder to keep your employees.

That’s right. You’ve got to be competitive and liked.

How can a company become an employer of choice?

Employees currently have choices and will choose an organization that meets their needs and aligns with their values. Although competitive wages are nice, equally important is the culture and work environment.  Companies that are mission-driven and have strong HR systems, as well as modern and safe working conditions, tend to attract and retain top talent. Leadership and team development is also critical to building a committed work culture.

One way to help with recruiting is to think outside the box. So rather than just looking at traditional hiring practices, you’re engaging with programs like Second Chance, Work Based Learning, and apprenticeships, while also investing in your relationships with high schools, technical colleges, and universities in your region.

Then, to get employees off to a good start, you want to be sure you’re keeping the lines of communication open. That’s not just a matter setting your expectations clearly, for example, but also being open to feedback from employees from day one onward, through things like counseling, mentorship, and surveys.

And a lot of people forget that staffing isn’t a one-and-done kind of thing. You’ve got to think longer-term, to have professional development plans for everyone on your team, not just the executives and so on. It’s really about creating a workplace where people feel valued — a culture they want to be a part of.

How is EV manufacturing different than internal combustion engine manufacturing?

Compared to combustion engines, there are about 30% to 40% fewer components in electric vehicles. Also, we’ve added weight to vehicles and trucks, because the batteries are heavy. So, we try to make it up in lightweight materials and low-friction materials.

I was talking to a friend who rented an EV and had a flat tire and had to call for help. I was like, “Just put the spare on.” Well, there’s no spare. Why? It adds weight. “Well, just plug the tire.” But you can’t plug the tire. Why? Because they’re low-friction tires, to make up for the heavy weight of the battery and the drivetrain.

So, he had to call for help. Those are little things that you don’t think about.

EV vehicles are probably more closely related to electronics now than they might be automotive. Outside of the battery, the electronics are probably the third biggest in cost. Two things are kind of coming together at one time. One is connected vehicles, meaning they are talking to other cars, talking to map systems, talking to buildings, and so everything’s connected, and that’s requiring a lot of electronic power. The second is autonomous vehicles, EV’s self-driving connected vehicles. It’s redefining things.

What are some of the challenges to be overcome?

For the suppliers, one is the variation in EV demand and EV adoption. That uncertainty has put additional burden on the suppliers to strategically meet the needs of the EV manufacturers and not go broke in the process.

There’s an interesting phenomenon going on right now where suppliers are trying to pivot and retool for EV components while maintaining what we call ICE (internal combustion engine) components. Because of that, suppliers have been hit with inefficiencies, because now they’re trying to bring up a new process while supporting the old, and the conversion is kind of in between.

Some of the bigger suppliers, like BorgWarner, Bosch, and Magna are big enough they can retool and afford to do it and weather the storms. So, they’re in the lead. But for some of the smaller suppliers it’s tough, and it’s even tougher for startups. If you’re manufacturing door handles, and each vehicle on average has four door handles, and you’re making 300,000 of them or variant thereof, you get economy of scale.

But then a startup comes in and says, “Well, this year we might sell 15,000 vehicles,” and it becomes more of a custom order, which is harder to manufacture and harder to make profit on. It’s harder on the startup, and it’s harder on the supplier.

Then there’s the financial burden of converting, and the workforce transition and skills gap. For example, a large segment of the workforce is experienced with drivetrain production. There are transmission manufacturers, engine manufacturers, machine shops, and now it’s automated battery assembly lines and electric motors and electronics. It’s a pretty big shift.

Changing and new regulations add complexity and can be a factor to supply chain disruptions. Limited availability of scarce resources, such as cobalt, rare-earth magnets, lithium, etc., is a challenge to source and maintain a predictable and steady supply.  

Are there opportunities for a particular type of company to benefit from meeting the challenges that others might have?

The ones who are most likely to benefit are those companies that are in the electronics side, those that are in the control side, chip side, circuit side — as well those that are already in similar products and processes, such as body stamping and interior.

For wheel manufacturers, it could be an easy conversion. Tire manufacturer is a bit of a different design. Batteries have power management controls, power distribution, drivetrain architecture. Those things are significantly different, and they’re making rapid advances.

Just a side note: the EV batteries are really big right now, partly because of the insulation between the cells and partly because the battery is thicker due to the risk of fire. But if they can reduce that risk of fire — and one way of doing it is by going solid state — they could reduce the battery footprint and increase the power output.

What are some of the other technologies automotive manufacturers are considering?

There’s bidirectional charging, where you can feed the power from the EV back to your house. You can charge when the electricity rates are low and pull power from that vehicle when the rates are high. Bidirectional charging is starting to become more popular, but it’s super expensive right now to invest in the electronics to move that energy back and forth.

There’s a big push in Georgia to support the advancement of hydrogen fuel cells for heavy vehicles. Hydrogen power is green energy, especially if it’s produced through nuclear power. Right now, that qualifies as a green energy producer, and so with the nuclear power facility in Savannah — and with Hyundai and the international shipping infrastructure — there’s a good potential for the Southeast to be one of the leaders in hydrogen fuel cells.

How are U.S. economic incentives affecting EV manufacturing?

There’s a 100% tariff going into effect on Aug. 1, 2024, for Chinese EV imports. Now China must figure out where can they produce EVs and sell to the United States. They are investing heavily in facilities in Mexico.

For the consumer to get the full EV subsidy or tax break, the battery and the components must be sourced in the U.S., and if they are sourced outside but assembled in U.S., they can get a partial tax credit. That’s partly why Hyundai got ahead of the curve, building the plant near Savannah.

And we don’t know what the policies of the future will hold. I do think, regardless, that hybrids have a pretty good future and as technology improves, demand for BEVs improves. To avoid buying a soon-to-be-obsolete BEV due to a breakthrough in technology, such a solid state battery, many folks lease an EV.

If you are an automotive manufacturer interested in learning more about the services GaMEP can provide to help you stay competitive in the global market, please reach out to Mike or your region manager for more information.