In the wake of the historic Inflation Reduction Act — which mobilized billions of dollars toward technologies essential to the just clean energy transition — the United States has seen an electric vehicle manufacturing boom.
According to Bloomberg, thanks to the deluge of IRA incentives available only for domestic EV manufacturing, a renewed interest from private-sector investors, and a flood of government lending, over 100 battery and electric-vehicle production projects are announced or already under construction in the U.S. Altogether, these projects represent about $200 billion in total investments.
Of that $200 billion, the latest slice of the pie was awarded to Ford Motor’s battery joint venture, a public-private collaboration with Michigan automaker and South Korean battery behemoth, SK Innovation, to construct three battery plants across Tennessee and Kentucky.
The federal government loaned the two companies $9.2 billion to do it: the largest-ever government award in U.S. history, and certainly, by far, the biggest government backing for an automaker ever.
According to the Department of Energy, together, the two battery manufacturing plants in Kentucky and one in Tennessee are capable of collectively producing more than 120-gigawatt hours annually.
The joint venture is under the name BlueOval SK, and the three-factory built, plus Ford’s adjacent assembly unit to put those batteries to use has an estimated price tag of $11.4 billion. With the loan, the DOE is helping to temporarily foot the majority of the bill.
The conditional commitment comes from the government’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, a program that was authorized by the Energy Independence and Security Act all the way back in 2007. 16 years later, the program is funding a futuristic supply chain to make zero-emission electric vehicles the norm in the United States.
While the program has supported the production of 4 million advanced technology vehicles, the loan for the Ford-SK venture is over a billion more than the program has reportedly loaned in its entire lifetime, making the number of EVs these three plants will help produce almost unfathomable.
Almost.
However, Ford plans to produce 2 million EVs annually by 2026, several times more than the roughly 132,000 it produced last year.
Because Ford’s millions of electric cars and eSUVs will be made with domestically produced batteries, they will be eligible for IRA tax incentives, meaning that not only does Ford benefit from the government subsidizing batteries, but the cars will be more affordable for buyers who could qualify for additional tax rebates of up to $7,500 per vehicle.
Not only is this a complete restructuring of the automaker’s EV and legacy business, but it’s one puzzle piece in the White House’s effort to make America a domestic EV production powerhouse, and outpace the longest-reigning leader of the EV production regime: China.
The investment into BlueOval SK is only the latest move in the attempts to make the name United States synonymous with EV production. The South Korean company LG recently kicked off its colossal ramp-up of U.S. factories for EV and grid batteries, with IRA incentives likely playing a sizable role in the company’s decision.
The plant is set to double the energy capacity of the BlueOval SK plant, with 280 gigawatt-hours worth of factory capacity across America to meet the growing demand for both grid storage and EV batteries.
According to the company via Canary Media, battery customers are asking for domestic products. Whether the reasoning is for supply chain security or the be eligible for domestic production-only tax credits, big battery manufacturers are making more and more moves on U.S. soil.
In late May 2023, LG also announced a partnership with Hyundai Motor Group to build a $4.3 billion state-of-the-art battery manufacturing plant, and as e U.S. Hyundai President and CEO Jaehoon Chang put it, “we are ready to drive the EV transition in America.”
Previously, the EV models Hyundai, Kia, and Genesis were ineligible under IRA incentives, but by using the batteries from the new domestic plant, that will change, and so will the price.
Ford, Hyundai, LG, and SK Innovation aren’t the only ones taking on President Biden’s challenge of domestic EV production. Toyota is also throwing its hat, or rather its batteries, into the ring with a $5.9 billion investment in four battery plants access North Carolina.
The plant will start production in 2025, putting over 2,000 jobs in the region. Similarly, Hyundai’s mega-plant could bring over 8,000 jobs, and BlueOval’s 7,500, making this not only a good news story for the deployment of electric vehicles to inch ourselves away from gas-guzzling cars, but also one for jobs.
EVs will effectively reshape labor markets, and while the labor rights around mining must be taken into account, these plants may help rebuild regions that were once reliant on gas car manufacturing.
Clearly, the United States’ efforts for domestic EV production are working. As the New York Times reports, Europe is shaking in its boots about the subsidies incentivizing companies to build their factories in America and previous announcements by companies like Ford and BMW are helping cement the North American continent as an EV manufacturing hub. The increase in government lending is putting that hub’s creation into hyperspeed.
“BlueOval SK and our parent companies, Ford and SK On, are expanding demand for batteries and the exciting vehicles they will power. This federal loan from the DOE helps with that mission,” BlueOval SK CEO Dr. Robert Rhee said in a statement.
“The DOE’s commitment to this project will strengthen battery manufacturing in the U.S. while reducing carbon emissions, providing customers with high-performance vehicles, and creating good jobs for future generations.”
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