Canada is now the world leader in the lithium-ion battery supply chain, one of the few places to have an end-to-end electric vehicle manufacturing supply chain . As recently as 2022, China controlled approximately 77% of global lithium-ion battery production capacity. This shift shows how quickly government incentives and new investments in technology have transformed electric vehicle (EV) manufacturing.

Meanwhile in the United States, announcements of new EV manufacturing facilities (inclusive of both cars and batteries) have reached almost $200 billion USD in the past 24 months – 63% of which came after the passage of the Inflation Reduction Act, a bill aimed at boosting clean energy investment. 

“The growth in electric vehicle manufacturing is a success story of how government investment and policy can help create new jobs and jump-start an industry,” says Andrew Ahrendt, director of manufacturing for PCL. “A strong manufacturing economy is essential to our national security, economic resilience and continued prosperity. The reshoring of EV manufacturing helps achieve all these goals.” 

If the growth of EV manufacturing keeps up at its current pace, the United States is on track to reach a battery production capacity of 1,000 GWh by 2028, enough to power 10 million electric vehicles. Here are the trends setting the stage for EV manufacturing to grow in Canada and the United States.

The U.S. Inflation Reduction Act, passed in 2022, incentivizes EV manufacturing by offering tax credits to companies that build factories and invest in battery production within the region. Electric vehicles containing at least 50% North American-made components now qualify for substantial tax credits under new U.S. federal legislation.

These credits help offset the high capital expenditures required for electric vehicle battery production, which has historically been a challenge. The Canadian government has its own incentives, which include funding to attract battery manufacturers to its provinces, including Ontario and Quebec.

“EV plants are being built primarily near existing automaker supply chains,” says Ahrendt. “Manufacturers are looking for states and provinces where they can leverage local rebates, attractive tax structures and a skilled labor force to operate advanced facilities. By shortening supply chains, companies are able to cut costs and improve sustainability, all while benefiting from federal investment.”

The U.S. Department of Energy (DOE) is making significant investments in retrofitting aging automotive manufacturing plants, turning them into state-of-the-art electric vehicle battery manufacturing facilities. In July 2024, the DOE awarded $1.7 billion to support the conversion of 11 outdated auto plants into EV battery production facilities, paving the way for the expansion of domestic battery manufacturing capacity.

In Canada, the country’s first full-scale EV manufacturing facility is expected to produce 50,000 EVs starting in 2025 after a former auto assembly plant was retooled to manufacture electric vehicles.

Many automakers are choosing to retrofit existing factories to save on costs rather than build new facilities. Retrofitting offers several advantages, including using existing infrastructure, minimizing construction timelines and eliminating the need to acquire new land.

However, retrofitting is not always a perfect fit for every facility, according to Ahrendt.

“Retrofitting is a good option only when the existing plant can support the process,” Ahrendt says. “Important factors include process layout, material flow, water and utility infrastructure, logistics and the need for clean or dry rooms.”

The key is finding engineering and construction partners who can assist with cost-benefit analysis, optimize material flow and operate efficiently – which is key in determining whether retrofitting is feasible.

Ahrendt also suggests finding a partner experienced in a design-build approach, where the contractor is brought in during the design stage of the facility as opposed to after a design is completed.

“A project plan that builds in flexibility and alternatives to support growth, supported by a partner experienced in fast-track delivery and strategic equipment purchasing, can enable earlier production start-up than traditional methods,” says Ahrendt. “Given the scale of these facilities, which often exceed a million square feet, working with a design-build partner equipped to manage multi-level, mega-project delivery is critical for success.”

Major corporations such as Amazon and UPS are committing to zero-emission delivery vehicles, with plans to replace their fossil-fuel-powered fleets with electric alternatives in the coming decade. Amazon, for instance, has already placed a significant order for over 100,000 electric delivery vans from Rivian, a U.S.-based EV manufacturer. These fleets demand high-performance batteries that offer longer ranges and faster charging times, pushing manufacturers to scale up battery production capacity.

Local governments are also playing a pivotal role in this trend. Cities like Los Angeles, New York and Chicago are electrifying their public transit systems and police fleets as part of broader sustainability and emissions reduction goals.

With strong policy support, innovative retrofitting efforts, and ambitious corporate commitments to zero-emission fleets, the United States and Canada are well-positioned to redefine the global electric vehicle manufacturing landscape. With EVs projected to represent 60% of global vehicle sales by 2030, constructing more manufacturing facilities will be critical to supply this crucial market.