Biden Administration Approves $9.2 Billion Loan to Ford for US-based EV Battery Plants

The U.S. Department of Energy (DOE) has agreed to finance $9.2 billion to a joint venture between Ford Motor Company and South Korean partner SK On to develop three battery factories in Tennessee and Kentucky. This is the largest Electric Vehicle (EV) manufacturing loan ever.

In an effort to compete with China in the EV battery industry, the joint venture known as Blue Oval SK acquired the conditional low-interest government credit under the Advanced Technology Vehicles Manufacturing financing program.

According to the DOE, two battery manufacturing facilities will be constructed in Kentucky and one in Tennessee, with a combined capacity to produce more than 120 gigawatt hours’ worth of batteries.

Once the facilities are operational, the manufacturing construction will provide 7,500 operations employment in addition to 5,000 construction positions.

Jigar Shah, head of the DOE’s Loan Programs Office, said in an interview that the rationale was “to have people choose to put these supply chains here in the United States, not in other countries, and to do them faster and more confidently here.”

In addition to an assembly factory for the F-150 EV pickup, BlueOval SK previously had plans to invest $11.4 billion to establish three battery plants in the United States two years ago.

Robert Rhee, CEO of BlueOval SK, stated that the money will be utilized to “strengthen critical domestic supply chains, and produce high-quality batteries for future Ford and Lincoln electric vehicles.”

The $45 per kilowatt battery production tax credit was added by the $430 billion Inflation Reduction Act, which was adopted in August. Ford estimates that over the next three years, this may result in a cumulative tax credit of more than $7 billion.

Many Republicans have attacked the Biden administration’s aggressive drive toward EVs and away from more dependable fossil fuels, even if the investments are aimed at Republican-leaning states. The administration was criticized again during the House Energy and Commerce Committee hearing on Thursday.

“People are struggling to afford some of the highest energy and auto prices in decades as a result of Biden’s energy and inflation crisis,” according to Cathy McMorris Rodgers (R-Washington), chair of the House Energy and Commerce Committee, and Bill Johnson (R-Ohio), chair of the subcommittee on environment, manufacturing, and critical materials, green energy regulations are hitting middle-class and low-income households the most.

Another issue is the possibility that China’s Communist Party would have unheard-of influence over the global economy due to its control of the minerals needed for battery production.

Toyota, a Japanese automaker, has recently come under fire from its investors for refusing to switch to all-electric vehicles because it expects “tremendous bottlenecks” in ore supplies will accompany the global switch towards EVs.

The loan is excellent news for Ford, which has had to recall 4 million vehicles since the start of this year due to numerous production flaws, including the recall of 125,000 hybrid models due to engine fire concerns.

Other recalls concerned less serious problems. Just last week, Ford said that it was recalling about a million vehicles and SUVs due to inadequate instructions in the owners’ manuals.