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By Jonathan Lee•Last Updated August 25, 2025

How Automakers Are Near-Shoring EV Production: Strategies for Supply Chain Resilience and Growth

Photo by Ernest Ojeh on Unsplash

Introduction: The Shift Toward Near-Shoring in Electric Vehicle Manufacturing

Automakers are rapidly adjusting their strategies to near-shore electric vehicle (EV) production. This move is driven by a combination of regulatory pressures, shifting consumer demand, supply chain vulnerabilities, and escalating geopolitical risks. For both established brands and new entrants, localizing EV manufacturing presents opportunities to control costs, secure critical materials, and improve sustainability profiles. Below, we examine actionable strategies, leading examples, and practical guidance for companies contemplating or executing near-shoring initiatives in the EV sector.

1. Understanding Near-Shoring in the EV Context

Near-shoring refers to relocating manufacturing operations closer to the target market. For EVs, this often means shifting production and sourcing of batteries, components, and finished vehicles from distant regions (such as East Asia) to North America or Europe. The primary motivations include:

Mitigating tariff and trade risks : Recent U.S. tariffs on imported vehicles and batteries have significantly increased costs for automakers reliant on overseas supply chains. By moving production closer to home, companies can reduce exposure to unpredictable tariff hikes and complex customs procedures [3] .
Enhancing supply chain resilience : Global disruptions have exposed the fragility of extended supply networks. Localized production enables faster response to market shifts and logistical challenges [1] .
Meeting sustainability goals : Shorter supply chains lower carbon footprints by reducing transport emissions. Regulatory mandates in the U.S., Europe, and Asia are accelerating this shift [4] .

2. Key Strategies Automakers Use to Near-Shore EV Production

Automakers employ several tactical approaches to successfully localize EV manufacturing. The most common and effective strategies include:

A. Localizing Battery Manufacturing

The battery is the most critical and expensive EV component. Automakers increasingly form joint ventures or invest in domestic battery plants to ensure security of supply and eligibility for local incentives. For example, Honda partnered with LG Energy Solution to create a $3.5 billion battery facility in Ohio, designed to supply its U.S. assembly plants [2] . This not only mitigates tariff exposure but also aligns with U.S. government requirements for domestic content in EV tax credits.

Implementation guidance: Companies considering localization should evaluate available state and federal incentives, identify potential joint venture partners, and assess proximity to renewable energy sources, which can further reduce carbon impact.

B. Leveraging Trade Agreements and Incentives

Many countries offer incentives for local manufacturing, ranging from tax credits to grants. Automakers benefit from conducting comprehensive trade analyses to maximize these opportunities and avoid costly tariffs. For instance, the U.S.-Mexico-Canada Agreement (USMCA) provides favorable terms for content produced within North America [1] .

Action steps: Engage with trade advisors or consult the official U.S. Department of Commerce website to review current manufacturing incentives and compliance requirements. Companies should also monitor updates to trade agreements that may affect eligibility for incentives or tariffs.

C. Investing in Flexible and Multi-Energy Production Facilities

Automakers are retooling existing plants to produce multiple vehicle types-internal combustion, hybrid, and electric-under one roof. This allows for rapid shifts in production as market demand evolves. A leading example is Honda’s investment of over $1 billion to upgrade its Ohio plants, enabling quick adaptation to technological and regulatory changes [2] .

Guidance: When planning facility upgrades, companies should prioritize modular equipment, cross-training of staff, and digital infrastructure that supports rapid model changeovers. Consulting with engineering firms experienced in multi-energy transitions can streamline this process.

D. Adopting Advanced Supply Chain Technologies

Technologies like AI-driven logistics, digital twins, and real-time inventory management are essential for optimizing near-shored operations. These tools reduce the complexity of managing dispersed supplier networks and enable faster decision-making [1] .

Practical steps: Automakers should invest in supply chain visibility platforms and collaborate with technology providers specializing in automotive logistics. Pilot programs can help quantify benefits before full-scale implementation.

3. Real-World Examples and Case Studies

Several automakers have made significant progress in near-shoring EV production:

Honda and LG Energy Solution: Their Ohio battery plant joint venture is expected to create 2,200 jobs and supply batteries for regional EV assembly, exemplifying how local partnerships can enhance supply security and economic impact [2] .
Mercedes-Benz and Green Steel Procurement: Mercedes-Benz has secured large quantities of low-emissions steel from Stegra (Sweden), signaling how procurement decisions can align near-shoring with sustainability mandates [4] .
BYD and Battery Recycling: BYD operates 23 battery recycling centers, demonstrating how circular economy practices can be integrated into local supply chains for cost and environmental benefits [4] .

4. Practical Steps for Automakers Considering Near-Shoring

Companies evaluating near-shoring should follow a structured process:

Conduct a feasibility and site selection study: Assess labor costs, infrastructure, regulatory environment, and potential partners. Not all locations will deliver equal cost savings, especially for capital- or energy-intensive projects [1] .
Analyze trade agreements and incentive programs: Review eligibility for local, state, and federal incentives. Consult the U.S. Department of Commerce or your national trade ministry for current information on EV manufacturing incentives.
Evaluate supply chain readiness: Map key suppliers for batteries, electronics, steel, and other components. Identify gaps in local content and develop strategies to support or attract new suppliers.
Plan for workforce development: Partner with local technical schools, universities, and workforce programs to build a pipeline of skilled talent for advanced manufacturing roles.
Invest in digital infrastructure: Deploy technology for real-time supply chain visibility and agile manufacturing operations.

5. Potential Challenges and Solutions

Near-shoring is not without its hurdles. Companies may face:

Higher initial investment costs: Upgrading or building new facilities requires significant capital. However, these costs can be offset by long-term savings on logistics, tariffs, and incentives.
Workforce development needs: Regions with limited experience in EV manufacturing may need targeted training programs. Companies can collaborate with local governments and educational institutions to develop curricula and apprenticeships.
Supply chain gaps: There may be a lack of local suppliers for specialized components. Strategic partnerships and supplier development initiatives can help fill these gaps over time.

To address these challenges, companies may consider phased investments, leveraging government support, and maintaining flexible production systems that can adapt as local ecosystems mature.

6. Guidance on Accessing Incentives and Support Programs

Automakers and suppliers interested in near-shoring EV production can:

Contact the U.S. Department of Commerce or equivalent national trade agencies for the latest information on EV-related incentives and grants.
Consult with state or regional economic development offices. Many states maintain dedicated teams to assist with site selection, workforce training, and access to grants.
Engage with industry associations such as the Alliance for Automotive Innovation, which provides resources and advocacy on manufacturing policy.
Search for local workforce programs by visiting official state workforce development websites or community colleges specializing in advanced manufacturing training.

It is strongly recommended to use official agency websites or direct contact methods-such as phone or verified email-for the most accurate and current information. To avoid misinformation, do not rely on unofficial or unverified web addresses. Instead, search for the relevant agency or program by name using established search engines or business directories.

7. Alternative Approaches and Industry Trends

Some automakers are exploring alternative strategies alongside near-shoring, such as:

Strategic alliances with local and regional suppliers to foster innovation and reduce lead times.
Investments in battery recycling and sustainable materials sourcing to minimize reliance on new raw materials and align with circular economy principles [4] .
Vertical integration to control more of the value chain, from raw materials to final assembly.

By combining these approaches, automakers can build a more resilient and responsive EV production ecosystem, better equipped to meet future demand and regulatory requirements.

Conclusion: The Road Ahead for Near-Shored EV Production

Near-shoring is rapidly becoming a strategic imperative for automakers navigating the fast-changing EV landscape. By localizing battery manufacturing, leveraging incentives, investing in flexible facilities, and adopting advanced technologies, companies can unlock cost savings, improve supply chain resilience, and achieve ambitious sustainability goals. As regulations tighten and consumer expectations evolve, those who adapt their strategies today will be best positioned for long-term success in the electric vehicle market.