DOE offers record-breaking $9.2B loan to build EV batteries in the US

The Biden administration has offered a record-breaking $9.2 billion conditional loan commitment to a Ford Motor Co. joint venture to help scale up domestic lithium-ion battery production for the U.S. electric vehicle market.

The Department of Energy’s Loan Programs Office plans to offer the loan to BlueOval SK, a joint venture of Ford and South Korea–based battery maker SK On. It’s by far the largest amount yet in a string of LPO loans aimed at bolstering U.S. competitiveness in EV battery manufacturing, mining and materials production.

These industries have been supercharged by the tax incentives, grants and loans authorized under last year’s Inflation Reduction Act. Since the law was passed in August, investment in U.S. battery manufacturing has ballooned to more than $50 billion.

The Biden administration has made domestic battery production a key economic and national security focus. DOE’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, which issued catalyzing loans to Tesla during the Obama administration, has become an essential instrument for accomplishing those goals.

Since its resurgence under the leadership of Loan Programs Office head Jigar Shah, the ATVM program has awarded a $2.5 billion loan to Ultium Cells, the battery joint venture of General Motors and LG Energy Solution, and last month it offered conditional approval of an $850 million loan to Kore Power, a U.S.-based battery manufacturer with stationary energy storage and EV battery ambitions.

ATVM has also backed a range of projects supporting the battery industry, such as a $102 million loan to Syrah Technologies to produce graphite anode material for batteries. So far this year, it has offered conditional loan commitments including $375 million for battery recycler Li-Cycle, $2 billion for battery recycler Redwood Materials, $700 million to the Rhyolite Ridge lithium and boron mining project in Nevada, and $362 million to CelLink, a maker of flexible circuit wiring harnesses and battery-pack interconnection circuits.

The $9.2 billion loan commitment to BlueOval is meant to bolster the joint venture’s plans to invest $11.4 billion in the construction of three new lithium-ion battery manufacturing facilities, two in Kentucky and one in Tennessee. Together, the plants will enable more than 120 gigawatt-hours of U.S. battery production annually and displace more than 455 million gallons of gasoline per year, LPO reported.

The factories are among a cluster of battery manufacturing, materials processing and mining facilities across the U.S. Southeast that have brought billions of dollars of investment and thousands of jobs to the region. That booming battery manufacturing industry is expected to lead to more EV supply-chain investment in the region, ​“further catalyzing the growth of the domestic EV industry,” Shah said in an email.

BlueOval must still meet certain milestones and conditions to receive final approval for the loan.