Production of EVs and Chips Comes to Forefront

The Federal Reserve continues to raise interest rates in an attempt to cool the job market and inflation, with an effective rate now more than 5 percent, the highest since June 2006.1 As a result, consumers are still focusing more on savings than spending, with consumer confidence falling in April for the third time in four months, according to the Conference Board. However, despite rising costs and the reported lack of consumer confidence in the overall economy, many individuals who need to replace their cars — which were in short supply during the pandemic — are now doing so. And, perhaps not surprisingly, more and more people are looking at electric vehicles (EVs). In fact, in January 2022, EVs accounted for just 4.3 percent of new car sales, but that figure was up to 7 percent in January 2023.2

The auto industry’s push to get to net-zero is illustrated by the number of jobs in the EV and lithium-ion battery sector listed in Area Development’s 18th Annual Shovel report, the results of which are presented in this issue. More than 35 EV/ battery projects across 18 states, representing billions of dollars in investment and thousands upon thousands of new jobs, were reported to us as having gotten under way in 2022.

Those vehicles also utilize thousands of semiconductors, as do tech products like cell phones, computers, household appliances, LED bulbs, and more. So, it’s also not surprising that more than a dozen new semiconductor/chips projects are listed among the states participating in our Shovel Awards report — again representing billions of dollars in investment and thousands of new jobs.

Another sector that saw many projects commence in 2022 was life sciences/ biotech as the sector works on developing new diagnostic devices as well as treatments including new vaccines and antiviral medications. Two features in this issue explore the challenges facing the life sciences industry from converting office space that’s been vacated by remote workers to life science space, as well as meeting the expectations of employees in this sector

It remains to be seen if investment in the above mentioned sectors in 2023 will compare with that of 2022 as persistent inflation is met by higher interest rates and tightening monetary policy. However, analysts believe that manufacturers who continue to invest in technology, implement policies to retain top talent, and diversify their supply chains can navigate these challenging times.

Editor

1 https://www.bankrate.com/banking/federal-reserve/history-of-federal-funds-rate/

2 https://insideevs.com/news/657660/us-electric-car-sales-january2023/

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