The U.S. Department of Energy (DOE) has finalized a significant $9.63 billion loan to support a joint venture between Ford Motor (F) and South Korea’s SK On, named BlueOval SK. This financial support, the largest ever awarded through the DOE’s Advanced Technology Vehicles Manufacturing loan program, is aimed at constructing three new battery manufacturing plants in Tennessee and Kentucky. These facilities are crucial for scaling up U.S. electric vehicle (EV) battery production, targeting over 120 gigawatt hours annually, which is a strategic move to enhance domestic manufacturing capabilities in response to global competition, particularly from China.
This loan represents a continuation of the Biden administration’s push to bolster EV production before the transition to President-elect Donald Trump’s administration, which has shown skepticism towards such initiatives. The final loan amount surpasses the initial $9.2 billion conditional commitment made in June 2023, reflecting the government’s commitment to fostering technological and industrial advancements in the EV sector.
Jigar Shah, head of the DOE Loan Programs office, emphasized the importance of this program in encouraging domestic manufacturing, countering the long-term use of low-cost debt by competitors like China which has led to a decline in manufacturing in states like Kentucky and Tennessee. BlueOval SK has already invested over $11 billion in these projects, with plans to initiate production in Kentucky in 2025, followed by Tennessee later that year.
The process to finalize this loan took nearly 18 months due to comprehensive due diligence by the DOE, involving technical, market, financial, credit, legal, and regulatory reviews. This thorough evaluation underscores the government’s intent to ensure these projects not only meet economic goals but also stand up to rigorous scrutiny for sustainability and viability.
This move by the DOE is part of a broader strategy to support the EV industry. Other notable actions include a planned $7.54 billion loan to the StarPlus Energy joint venture between Stellantis and Samsung SDI for building EV battery plants in Indiana, and a proposed $6.6 billion loan to Rivian (RIVN) for a new plant in Georgia to produce more affordable EVs by 2028. Additionally, in late 2022, a $2.5 billion loan was finalized for a General Motors and LG Energy Solution joint venture for lithium-ion battery cell manufacturing across Ohio, Tennessee, and Michigan.
These loans signify a concerted effort to strengthen the U.S. position in the global EV market, create jobs, and reduce dependence on foreign technology and manufacturing, amidst an evolving political landscape that might challenge these initiatives.
h/t Reuters
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