The United States Energy Department said it intends to loan Ultium Cells, the joint venture company founded by GM and LG Energy Solution, $2.5 billion in order to help it built EV battery cell manufacturing plants in the country.
The loan agreement is set to close in the coming months and will help finance the construction of Ultium Cells plants in Ohio, Tennessee, and Michigan. The money comes from the U.S. government’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, reports Reuters.
“We have to have vehicle manufacturing capacity but also battery manufacturing capacity,” Jigar Shah, who leads the Energy Department loan program office, told the outlet. “This project provides one of the newest additions to battery manufacturing scale in this country.”
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In total, Ultium Cells will spend more than $7 billion building the above-mentioned plants. In order to receive this loan, though, it will have to offer employees the local prevailing wage and fringe benefits.
The loan would be the Energy Department’s first directed exclusively at battery cell manufacturing. It has, however, previously provided low cost loans to Tesla, Ford, and Nissan, which included some cell manufacturing.
The ATVM program currently has $17.7 billion in lending authority, said Shah. He added that the program has already received more than $18 billion in loan requests and expects another $5 billion more. The Biden administration has set a goal of turning 50 percent of U.S. auto production to electric or plug-in hybrids by 2030, which this program will help facilitate.
Ultium’s plant in Ohio is expected to start manufacturing battery cells in August, whereas production at its Tennessee plant is expected to start in 2023, and its Michigan plant will be up and running in 2024. The plants will provide battery cells for vehicles based on GM’s Ultium platform, which underpins vehicles such as the GMC Hummer EV and the Cadillac Lyriq.