US Department of Energy Grants Ford $9.2 Billion Loan for EV Battery Factories

According to Bloomberg, the US Department of Energy’s Loan Program Office (LPO) has granted a conditional $9.2 billion loan to BlueOval SK (BOSK), a joint venture between Ford and South Korean battery manufacturer SK On, to construct three battery manufacturing facilities. This move reaffirms the US government’s commitment to domestic EV production rather than relying on foreign entities.

The loan is the largest LPO has issued to date – almost four times the size of last year’s $2.5 billion loan to Ultium Cell – a joint venture between General Motors and LG. The size of the loan is partly due to the inflation-reducing law passed last year, which led to an increase in the LPO’s loan budget to $400 billion. For context, over the past 14 years, LPO has diversified around $33 billion. Additional capital will certainly be needed to meet the Biden-Harris administration’s goal of electric cars accounting for half of U.S. auto sales by 2030.

There are two plants in Kentucky and one in Tennessee, and all three will make batteries for Ford and Lincoln’s upcoming electric car. The automaker also announced plans to establish an LFP battery plant in Michigan earlier this year. The production ramp-up comes as Ford plans to launch two million electric cars by 2026. The All-Electric Explorer, Mustang Mach-E and E-Transit are already available, and an electric car lineup is in the works for Lincoln. By comparison, Ford will produce about 132,000 electric cars in 2022. Ford also recently ensured that electric vehicle drivers have access to 12,000 Tesla charging points in North America.

LPO emphasizes that the loan also brings career opportunities to the regions and creates 5,000 construction jobs and another 7,500 operating jobs after the factories start up. The investment also aligns with President Biden’s Justice40 initiative, which calls for 40 percent of certain federal investments (including LPO loans) to go to disadvantaged communities.