DOE offers $15.5 billion to retool existing auto plants for EVs

The Biden administration on Thursday said it is offering $15.5 billion to help U.S. automakers retool existing plants that make gas-powered vehicles and turn them into factories that deliver electric cars and trucks.

The U.S. Department of Energy funding includes $2 billion in Inflation Reduction Act grants to convert domestic manufacturing facilities and expand production of hybrid, battery-powered and hydrogen fuel-cell vehicles. The DOE is also planning to provide up to $10 billion to support conversion projects through the Advanced Technology Vehicles Manufacturing Loan Program. Separately, $3.5 billion could be made available to expand domestic battery manufacturing via the Bipartisan Infrastructure Law.

The announcement arrives at a particularly tense period for the U.S. auto industry — fueled in part by workers’ growing concerns that electrifying America’s transportation sector could mean eliminating certain jobs and shifting employment away from traditional manufacturing centers.

“While we transition to EVs, we want to ensure that workers can transition in place, that there is no worker, no community left behind,” Energy Secretary Jennifer Granholm told reporters on a Thursday call.

The DOE unveiled the funds nearly a week after Detroit-based United Auto Workers, the nation’s largest auto union, voted overwhelmingly in favor of authorizing a strike against one or all of the Big Three automakers: General Motors, Ford Motor Co. and Stellantis, the parent company of Jeep and Chrysler. Union members are calling for wage hikes, reinstating cost-of-living adjustments and shifting back to pension plans; they could strike if an agreement isn’t reached by September 14.

All three auto giants have cited the transition to EVs in their earlier decisions to cut thousands of jobs, offer buyouts and idle auto plants across the industrial Midwest.

At the same time, Detroit automakers and their joint-venture partners are building clusters of new factories — from Michigan, Indiana and Ohio, down through Kentucky, and across Tennessee, Georgia and the Carolinas — to assemble EVs, process lithium, build batteries and recycle EV materials. Generous tax incentives provided under the Inflation Reduction Act are fueling much of this growth, particularly within the Southeast. So, too, are the ​“right-to-work” policies embraced by states in that region, which have been used to weaken union power and give automakers more leverage over their workers.

Shawn Fain, president of the UAW, has spoken about the need for automakers to ensure union representation at their new EV and battery plants. Most recently, Fain expressed disappointment that the Inflation Reduction Act — which includes billions in tax breaks and loans to bolster EV manufacturing, plus rebates for EV buyers — doesn’t include guarantees on pay and conditions for auto workers.

“We have been absolutely clear that the switch to electric engine jobs, battery production and other EV manufacturing cannot become a race to the bottom,” Fain said in a June statement after the DOE’s Loan Programs Office offered a record-breaking $9.2 billion loan commitment to BlueOval. The joint venture between Ford and South Korea–based battery maker SK On plans to invest $11.4 billion in three new lithium-ion battery manufacturing facilities, including two in Kentucky and one in Tennessee.

On Thursday, Fain applauded the new DOE grants and loans, saying the money would give imperiled auto plants — such as facilities in Belvidere, Illinois; Lordstown, Ohio; and Romeo, Michigan — ​“a chance for federal support to ensure those jobs and communities are protected.”

Granholm said during the press call that she didn’t know if the newly announced funding ​“will have an impact” on UAW’s ongoing negotiations with the Detroit automakers. But she noted that the Biden administration has spoken with automakers, auto workers and affected communities as it works to roll out clean energy investments.

“We are going to focus on financing projects that are in long-standing automaking communities, that keep folks already working on the payroll, projects that advance collective bargaining agreements, that create high-paying, long-lasting jobs,” Granholm said.