With sky-high fuel prices draining the pocketbooks of commuters across the state and nation, the prospect of electric vehicles (EVs) seem even more attractive than they did in the halcyon days when a gallon of gas was under $3 — and Pinal County is positioning itself to become the Detroit of electric vehicles.
Many EV options, however, defy the label “affordable” and the limited availability of one of the biggest brands in the market segment — Tesla — often has consumers at the bottom of a long waiting list.
That said, all signs point to the continued electrification of the automotive industry. On Aug. 5, 2021, the Biden Administration published a statement made by three major car manufacturers:
“Today, Ford, [General Motors] and Stellantis announce their shared aspiration to achieve sales of 40-50% of annual U.S. volumes of electric vehicles (battery electric, fuel cell and plug-in hybrid vehicles) by 2030 in order to move the nation closer to a zero-emissions future consistent with Paris climate goals. Our recent product, technology and investment announcements highlight our collective commitment to be leaders in the U.S. transition to electric vehicles.”
Driving for leadership
With the Build Back Better Plan seemingly dead, some federal provisions are stalled, such as incentives to expand the electric vehicle manufacturing and supply chains in the U.S., but automakers are still driving progress.
“The same talking points are being shared between industry, state and the federal level. They’re all connecting, and I think that’s the biggest sign of commitment and competence. These segments of the marketplace are sort of humming the same tune,” says Britta Gross, managing director at the Rocky Mountain Institute and Orlando Public Utility Commissioner, during an Arizona Forward panel discussion on Feb. 1, 2022. “Electric vehicles are coming, and we are debating amongst ourselves whether they’re coming in large volumes in 2025, 2028 or 2030.”
With the inevitability of EVs constituting a significant portion of car sales in the next decade, the race is on for cities across the U.S. to benefit from that growth. Gross, who worked for GM for nearly two decades, notes that automakers take many factors into account when choosing where to place manufacturing facilities, such as the business environment and the availability of land — both of which she says Arizona has.
“But colocation and proximity also matter,” Gross says. “Colocation is a big deal to automakers, because it means they’ve got access to labor and the right skill sets. Proximity is a cost saver since it’s cheaper to move things around like test vehicles and batteries. There is a big need for the domestic production of not only vehicles and batteries, but also charging infrastructure. Don’t overlook these big opportunities for all those [components] that go into charging equipment to come from Arizona, because today, most of it comes from overseas.”
The EV industry has taken root in Arizona, with companies such as UACJ Whitehall creating parts for EVs in Flagstaff, KORE Power building batteries in Buckeye and ElectraMeccanica manufacturing its single-seat EV in Mesa.
The cities of Pinal County have also benefitted from the electrification of cars, with multiple major facilities choosing the region and positioning it as an EV powerhouse for years to come.
Picking Pinal County
On Nov. 29, 2016, Governor Doug Ducey and Lucid Motors announced that the company had chosen Casa Grande after a nationwide search across 13 states and 60 sites. It was projected at the time that over 2,000 new jobs would be created, and the facility would generate more than $700 million in capital investment by 2022. Then, in 2021, Lucid announced that it would be expanding its Casa Grande manufacturing plant by 2.85 million square feet. The increased capacity will create approximately 6,000 direct jobs with an economic impact of more than $100 million by 2030.
About two years after Lucid’s initial decision to locate in Casa Grande, another EV manufacturer chose Pinal County. Sitting on a 430-acre parcel in Coolidge, Nikola’s 1-million-square-foot facility is building electric semi-trucks with the goal of transforming the transportation and logistics sector. The plant is expected to produce 2,500 trucks in 2022 and will increase to 20,000 trucks per year once phase two of the facility is complete.
“With the expansion of Nikola and Lucid, we feel like we’re becoming the epicenter of electric vehicles — certainly in Arizona, if not nationwide,” says James Smith, economic and workforce development director for Pinal County. Moreover, as companies such as Lucid and Nikola double down on their investments in Pinal County, other businesses can take advantage of the industry cluster that is forming.
The recent announcement of LG Energy Solution’s cylindrical battery factory in Queen Creek is one example of this dynamic. The batteries that will be manufactured at the site offer high-density, compact energy storage ideal for electric vehicles. The $1.4 billion facility will be the first of its kind in North America and is expected to employ up to 2,800 people.
“As you can imagine, these international projects are fiercely competitive,” explains Sandra Watson, president and CEO of the Arizona Commerce Authority (ACA). “Arizona offers — I would say — the best business climate in the country. We are fortunate that we have great leaders like Governor Ducey who are creating the conditions for this type of investment [that] allows us to market and sell Arizona in a way that others cannot do.”
A balanced and comprehensive strategy that not only focuses on incentives, but also investing in modern infrastructure, having affordable energy and implementing regulations that are not overbearing are paramount for attracting these companies that will benefit the communities in which they reside, according to Watson. The ACA does, however, have other tools to attract businesses large and small.
“We manage all the financial programs for economic development for the state of Arizona. We have tax credits that we’re able to offer [and] tax policies that we share with companies to better educate them on how to calculate [potential] tax advantages,” Watson continues. “What our lawmakers have done in Arizona is look at opportunities to enhance business growth in a fair and equitable way. And that means establishing programs that apply to all businesses.”
Workforce wish list
As companies search for potential sites, several criterion factor into the decision to break ground in one location over another. Pinal County benefits from having access to two major interstates and the Union Pacific mainline, along with the region’s proximity to the ports in California and the Mexican border. Tax benefits are another carrot economic developers can use, but ultimately, companies need access to their most valuable asset: employees.
Richard Wilkie, economic development director for the City of Casa Grande, explains the significance of having a talent pipeline in place when it comes to manufacturing electric vehicles in Pinal County. “[Lucid] is a startup company, so they wanted to make sure they made the right decision of where they were going to locate. They spent months and months looking at the workforce,” he says. “They’re projecting upwards of 6,000 people working for them. [Lucid] wanted to make sure they were going to meet not just the immediate need, but the future needs of the company, and concluded that the workforce is as good as anywhere you’re going to find in Arizona.”
With Pinal County being located between two major research universities — Arizona State University and University of Arizona — EV manufacturers have access to a consistent supply of college-educated talent. Not only that, but as these companies continue to congregate together, newcomers can tap into an existing labor pool that already has the necessary skills for the job.
The state’s leaders realize how imperative a highly skilled workforce is to the growth of the economy and opened up Drive48 in Coolidge last year.
“Drive48 was developed with a focus on collaboration, bringing together our community college system, as well as industry leaders to develop specific job training opportunities to accelerate and enhance workforce training throughout Arizona,” Watson says. “This is an important opportunity to showcase to industries all over the country that Arizona is working hand in hand in a collaborative way to ensure that they’ve got the talent they need to be successful.”
The partnership between the state, Pinal County, Casa Grande and Central Arizona College has already paid dividends. Watson notes that 1,700 workers in Pinal County have already been trained, which has enabled Lucid to meet its production schedule. The goal is to build another six of these state-of-the-art facilities throughout the state.
“[Drive48] is being fully utilized by Lucid,” Wilkie adds. “They have different types of training in what they call dojos, which are basically separated classrooms. It’s flexible, so if they need to change the programming in the future, it’s easy to do.”
Watson concludes, “I’m happy to report that the model is considered a national model. We’ve had other states and workforce groups talk to us about how we were able to establish [Drive48]. I imagine we’re going to see a number of these replicated throughout the country, because it truly is what that future of workforce training is going to look like.”