US DOE agrees $2.5bn loan for new manufacturing facilities
The US Department of Energy, through its Loan Programs Office, has announced the closing of a US$2.5bn loan to Ultium Cells LLC to help finance the construction of new lithium-ion battery cell manufacturing facilities in Ohio, Tennessee, and Michigan.
Ultium Cells, a joint venture between General Motors and LG Energy Solution, will manage battery cell production at the three facilities to address the growing US consumer demand for electric vehicles (EVs), a statement said.
It added that the project is expected to create approximately more than 11,000 jobs—6,000 in construction jobs and 5,100 in operations—across the three facilities, including more than 700 United Auto Worker jobs in the newly-organised Warren, Ohio facility.
“DOE is flooring the accelerator to build the electric vehicle supply chain here at home—and that starts with domestic battery manufacturing led by American workers and the unions that support them,” Jennifer M Granholm, US Secretary of Energy, said.
“This loan will jumpstart the domestic battery cell production needed to reduce our reliance on other countries to meet increased demand and support President Biden’s goals of widespread EV adoption and cutting carbon pollution produced by gas-powered vehicles.”
The loan will boost the nation’s standing as a global leader of EV manufacturing, the DOE added. The announcement follows the October launch of the American Battery Materials Initiative by President Biden.
The initiative came alongside US$2.8bn in grants from DOE to build out the battery mineral and material supply chain. This latest loan closing will directly support the President’s goals to reach net zero emissions by 2050 and having EVs make up half of all new vehicle sales by 2030, the statement continued.
“Investing in American production and Ohio workers is part of the work we are doing to put in place a new pro-American, pro-worker industrial policy,” Sherrod Brown, US Senator (OH), said.
“This loan will support Ohio in taking another step to lead the country and the world in producing sustainable technology and electric vehicles that Americans will need and drive over the next century.”
In July, LPO announced a conditional commitment for the loan to Ultium Cells to manufacture large format, pouch-type cells that use a state-of-the-art chemistry to deliver more range at less cost. Those cells can be arranged in different combinations to provide clean, reliable energy for all vehicles on the road today, including pickups, SUVs, and other family vehicles, as well luxury vehicles and commercial vehicles.
Ultium Cells said that it plans to use this technology in coordination with GM’s work to eliminate 100% of tailpipe emissions from its new US light-duty vehicles by 2035.
The loan will also support GM’s plans to install capacity to produce more than one million EVs annually in North America and make its global products and operations carbon neutral by 2040.
Reinvigorating US Manufacturing
“I authored the Advanced Technology Vehicles Manufacturing Programme to help ensure that clean vehicles and the innovative technologies that go into them are made here at home,” added Debbie Stabenow, US Senator (MI).
“This investment is welcome news for Michigan. It will create thousands of good-paying jobs, strengthen our supply chain, and help address the climate crisis.”
“Public-private partnerships are a way of linking private sector technologies and innovations with government resources, which ultimately leads to economic growth. I've been a huge proponent of these programmes for my entire tenure in Congress,” pointed out Tim Ryan, US Representative (OH-13).
“My steadfast advocacy for the Mahoning Valley to become the nation’s hub of electric vehicle production has yielded a major investment in our workforce by the Department of Energy and represents another big step toward realising a significant milestone.”
The announcement marks LPO’s first closed loan exclusively for a battery cell manufacturing project under the Advanced Technology Vehicles Manufacturing (ATVM) programme. Financing from the ATVM programme complements the historic investments of the President’s Bipartisan Infrastructure Law—US$7.5bn for EV charging infrastructure and more than US$7bn for the critical minerals supply chains necessary for batteries, components, materials, and recycling.
Additionally, highlighting the Biden-Harris Administration’s commitment to reinvigorating US manufacturing, President Biden’s Inflation Reduction Act makes critical investments and updates to the ATVM programme by appropriating US$3bn for the costs of direct loans to remain available through September 30, 2028, and uses from the President’s Bipartisan Infrastructure Law, including expanded uses for medium- and heavy-duty vehicles, maritime vessels, aviation, and other transportation modes.
The Inflation Reduction Act also gives a clear demand signal for EV batteries as the auto industry races to build the vehicles of the future right here in America.
Across all LPO’s new and improved programmes, DOE has attracted 98 active applications for projects across the country totalling over US$104bn in requested loans and loan guarantees, as of the end of October.