The U.S. Energy Department said it intends to loan a joint venture of General Motors and LG Energy Solution $2.5 billion to help finance the construction of new lithium-ion battery cell manufacturing facilities.
The conditional commitment for the loan to Ultium Cells LLC for locations in Ohio, Tennessee, and Michigan is expected to close in the coming months and comes from the government’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, which, since 2010, has not funded a new loan.
The plan would mark the Energy Department’s first loan specifically for a battery cell manufacturing project under the vehicle program.
The program earlier provided low-cost government loans to Tesla Inc, Ford Motor and Nissan, which included some cell manufacturing.
US President Joe Biden has set a goal of 50% of U.S. automobile production by 2030 being electric or plug-in electric hybrid vehicles.
“We have to have vehicle manufacturing capacity but also battery manufacturing capacity,” Jigar Shah, who directs the Energy Department loan program office said according to Reuters.
“This project provides one of the newest additions to battery manufacturing scale in this country.”
Production is set to start at its Tennessee plant in late 2023 and in Michigan in 2024.
“The goal is to… help these companies move faster and farther than they otherwise would have,” Shah said.
Shah added that the department has received over $18 billion in loan requests from the auto program and expects at least another $5 billion in requests that are being actively prepared.
“I do think there will more loans issued,” Shah said, declining to offer a precise timeline.
The program currently has $17.7 billion in lending authority available. Shah said, “for motivated borrowers, they can close these loans rather quickly.”
