The US Department of Energy has announced that it will provide a joint venture of automaker Ford and South Korean battery manufacturer SK On with a loan of up to $9.2 billion for three battery factories planned to be established in the country.
In the statement made by the ministry, it was reported that a conditional loan commitment was made to BlueOval SK, a joint venture of Ford and SK On, to further expand the electric vehicle battery production capacity in the USA.
In the statement, it was stated that within the scope of the said commitment, the US Department of Energy’s Credit Programs Office plans to provide BlueOval SK with a loan of up to $9.2 billion for the construction of 3 production facilities that will produce batteries for Ford’s electric vehicles.
US President Biden aims to have half of new cars sold in the US electric by the end of the decade, up from about 7 percent in the first three months of this year. By helping finance battery factories, the Biden administration aims to ensure that the United States does not become dependent on China for batteries and their components. Management also hopes the new facilities will help make up for the loss of jobs in traditional auto manufacturing.
One of the factories will be located in Stanton Tennessee, north of Memphis, adjacent to a large manufacturing complex that Ford has built to produce electric pickup trucks. The other two factories are located in Glendale, south of Louisville, and are expected to employ more people than Kentucky’s coal industry.
It is stated that it is expected to provide employment to 5 thousand people during the construction of the facilities, one of which is planned in Tennessee and two in Kentucky, and 7 thousand 500 people afterwards.
Ford is also spending $3.5 billion to build a battery factory in Marshall, Michigan, which will use technology from Contemporary Amperex Technology Ltd., a Chinese company known as CATL, which is the world’s largest manufacturer of batteries. Ford’s deal with CATL, announced in February, drew backlash from some Republicans who criticized Ford for working with a company with close ties to the Chinese government.
BlueOval’s loan will come through the Department of Energy’s Credit Programs Office, which has provided more than $35 billion in loans and loan guarantees for more than 30 projects over the past 14 years, according to the ministry. The office was created to provide loans to experimental and high-impact projects with flexible financing that private lenders cannot provide.
“The goal is to help people choose their manufacturing facility USA and do it faster than they would normally do. We’re excited about it,” said Jigar Shah, Director of the Office of Credit Programs.
“BlueOval SK will pay the same interest the federal government pays for borrowing money from investors, which is a much better rate than what is normally available for a company. Ford and SK, which are headquartered in South Korea, also need to meet certain conditions to collect the money, which mostly includes filing paperwork,” he added.
“This is a big step for an automaker to bring its supply chain to the United States so we have more control over our future,” said Doug Lewin, president of Stoic Energy, a consulting firm.
The program has been funding nuclear power plants, solar and wind projects, and domestic production of electric vehicle batteries since President Biden was elected. From 2009, when Barack Obama was president, to 2011, the office provided $16 billion in clean energy loans, about 90 percent of which went to subsidizing power plants. Beneficiaries included financial firms such as Goldman Sachs and utility companies such as Exelon and NRG.