In a significant move towards bolstering domestic electric vehicle (EV) production, the United States government has reaffirmed its commitment to reduce reliance on foreign entities. The Loan Program Office (LPO) of the US Department of Energy has announced a conditional loan of $9.2 billion to BlueOval SK (BOSK), a collaboration between Ford and South Korean battery producer SK On. The loan aims to facilitate the construction of three battery manufacturing plants, as reported by Bloomberg.
This loan is the largest ever granted by the LPO, surpassing last year’s $2.5 billion loan for Ultium Cell, a joint venture between General Motors and LG, by nearly four times. The loan’s significant scale is attributed, in part, to the Inflation Reduction Act passed last year, which resulted in an increase in the LPO’s lending budget to $400 billion. To provide context, over the course of the previous 14 years, the LPO had distributed approximately $33 billion. This additional capital will play a crucial role in achieving the ambitious goal set by the Biden-Harris administration for EVs to account for half of all US car sales by 2030.
The three battery manufacturing plants will be established in Kentucky (two plants) and Tennessee (one plant). These facilities will primarily focus on producing batteries for Ford and Lincoln’s upcoming electric vehicles. Earlier this year, Ford also unveiled plans for an LFP battery plant in Michigan. These production expansions are part of Ford’s strategy to introduce two million EVs by 2026. Notably, Ford has already made available the All-Electric Explorer, Mustang Mach-E, and E-Transit, with an EV lineup for Lincoln currently in development. By comparison, Ford manufactured approximately 132,000 EVs in 2022. Additionally, Ford recently secured access to 12,000 Tesla charging points across North America for its EV drivers.
The LPO emphasizes that this loan will generate employment opportunities, creating 5,000 construction jobs and an additional 7,500 operational jobs once the plants commence operations. Furthermore, this investment aligns with President Biden’s Justice40 Initiative, which aims for 40 percent of specific federal investments, including LPO loans, to benefit disadvantaged communities.
Frequently Asked Questions (FAQs) about EV battery factories
What is the purpose of the $9.2 billion loan secured by Ford from the US Department of Energy?
The purpose of the $9.2 billion loan is to enable Ford, in collaboration with SK On, to build three battery manufacturing plants for electric vehicles (EVs) in the United States.
How does this loan contribute to domestic EV production?
By providing significant financial support to Ford and its battery partner, the loan helps establish battery manufacturing facilities within the United States, promoting domestic EV production and reducing reliance on foreign entities.
What are the expected benefits of this loan?
The loan is expected to have several benefits. It will help Ford achieve its goal of rolling out two million EVs by 2026, contribute to the Biden-Harris administration’s target of EVs representing half of US car sales by 2030, and create thousands of job opportunities during both the construction and operational phases of the battery plants.
Which locations will host the battery manufacturing plants?
The three battery manufacturing plants will be located in Kentucky (two plants) and Tennessee (one plant). These facilities will focus on producing batteries for Ford and Lincoln’s upcoming electric vehicle models.
How does this loan align with President Biden’s Justice40 Initiative?
The loan aligns with President Biden’s Justice40 Initiative, which aims to direct 40 percent of specific federal investments, including loans provided by the US Department of Energy’s Loan Program Office, towards disadvantaged communities. This ensures that the benefits of the loan and associated job creation reach a broader range of communities.
More about EV battery factories
- Bloomberg: Ford secures $9.2 billion loan from US Department of Energy
- US Department of Energy Loan Programs Office
- Ford Newsroom: Ford to build three new battery factories, securing $9.2 billion loan from US Department of Energy
- President Biden’s Justice40 Initiative
- Ford Electric Vehicles
