Ford gets $9.2B for EV batteries
Uncle Sam’s clean-energy push is giving Ford a major boost. The Energy Department has awarded the automaker a massive $9.2 billion loan to fund the construction of three EV battery plants, a move Bloomberg reports is “by far the biggest government backing for a U.S. automaker since the bailouts in the 2009 financial crisis.” The U.S. is trying to reduce its battery reliance on China, which has dominated the market for years and has roughly 80% of the world’s manufacturing capacity. Ford, which made about 132,000 EVs in 2022, hopes to produce 2 million of the vehicles by 2026.
- The plants — two in Kentucky, one in Tennessee — are already in the works as part of BlueOval SK, a partnership between Ford and South Korean battery firm SK On. The total projected cost is $11.4 billion.
By Saundra Latham, Editor at LinkedIn News
Ford-SK venture to get $9.2 billion US loan for battery plants
The conditional commitment for the low-cost government loan for the BlueOval SK joint venture comes from the government’s Advanced Technology Vehicles Manufacturing (ATVM) loan program.
SK is a unit of South Korea’s SK Innovation (096770.KS). The joint venture is building two battery manufacturing plants in Kentucky and one in Tennessee capable of collectively producing more than 120 gigawatt hours annually, the Energy Department said.
Jigar Shah, head of the Energy Department’s Loan Programs Office, said in an interview its goal “is to have people choose to put these supply chains here in the United States, not in other countries, and to do them faster and more confidently here.”
Ford and SK announced in 2021 they would invest $11.4 billion to build a F-150 electric vehicle (EV) assembly plant and three battery plants in the United States with Ford investing $7 billion. Ford shares were up 1.2% in afternoon trading.
This is the sixth loan for battery supply chain projects from the ATVM program.
The project is expected to create 5,000 construction jobs in Tennessee and Kentucky, and 7,500 operations jobs once the plants are up and running.
“Major technology transitions have always been accelerated by collaboration between the public and private sectors,” said Ford Treasurer Dave Webb.
BlueOval SK CEO Robert Rhee said the loan will be used to “strengthen critical domestic supply chains, and produce high-quality batteries for future Ford and Lincoln electric vehicles.”
The $430 billion Inflation Reduction Act approved in August also creates a new $45 per kilowatt battery production tax credit. Ford CEO Jim Farley said in October that from 2023 to 2026, “we estimate a combined available tax credit for Ford and our battery partners could total more than $7 billion.”
The loan will fund two battery projects in Republican-leaning states. Many Republicans in Congress have criticized the Biden administration’s efforts to boost battery-powered vehicles and battery production.
Last year, the department awarded a joint venture of General Motors (GM.N) and LG Energy Solution (373220.KS) $2.5 billion to help finance construction of new lithium-ion battery cell manufacturing facilities. The loan to Ultium Cells LLC is for facilities in Ohio, Tennessee, and Michigan.
In September 2009, Ford was awarded a $5.9 billion low-cost government loan from the same program, an important source of liquidity in the aftermath of the global financial crisis. It completed its payments last year, after deferring some in 2020.
Ford announced in February a separate deal to spend $3.5 billion to use technology from Chinese battery company CATL (300750.SZ) to build a battery plant in Michigan. That plan has faced criticism from some Republicans.
Tesla (TSLA.O) received a $465 million loan in 2010 from the program that allowed it to open a plant in Fremont, California, and build the Model S electric car. It repaid the loan in 2013.