U.S. Energy Department to Provide $9.2 Billion Loan for Ford-SK On Joint Venture Battery Plants
The U.S. Energy Department has announced its plan to grant a conditional commitment for a record-breaking $9.2 billion loan to the BlueOval SK joint venture, a collaboration between Ford Motor and South Korea’s SK On. This significant loan from the government’s Advanced Technology Vehicles Manufacturing (ATVM) program aims to support the construction of three battery plants in Tennessee and Kentucky. It is the largest-ever award from this government program, highlighting the importance of advancing battery technology in the automotive industry.
The BlueOval SK joint venture involves SK, a unit of South Korea’s SK Innovation, and Ford Motor. Their ambitious project includes the establishment of two battery manufacturing plants in Kentucky and one in Tennessee. Once operational, these facilities will have a combined annual production capacity of over 120 gigawatt-hours, making a substantial contribution to the growing demand for electric vehicle (EV) batteries.
Jigar Shah, the head of the Energy Department’s Loan Programs Office, emphasized the goal of promoting domestic supply chains and fostering confidence in the United States as the preferred location for these critical technologies. The loan will not only accelerate the development of battery manufacturing capabilities but also create a significant number of jobs. During the construction phase of the project, it is anticipated that approximately 5,000 job opportunities will be created, offering employment to a diverse range of skilled workers. Additionally, once the plants are fully operational, there is expected to be a significant increase in job availability, with around 7,500 operational positions to be filled. This will provide long-term employment prospects and contribute to the local economy, fostering growth and stability in the region.
The collaboration between the public and private sectors has always played a vital role in driving major technology transitions. Ford Treasurer Dave Webb acknowledged the importance of this partnership and its role in accelerating the adoption of advanced technologies. BlueOval SK CEO Robert Rhee expressed his commitment to utilizing the loan to strengthen domestic supply chains and produce high-quality batteries for future Ford and Lincoln electric vehicles.
In addition to the government loan, the Inflation Reduction Act approved in August introduces a new $45 per kilowatt battery production tax credit, further incentivizing investments in battery manufacturing. Ford CEO Jim Farley estimates that, from 2023 to 2026, the available tax credit for Ford and its battery partners could exceed $7 billion.
It’s worth noting that the loan will support projects in Republican-leaning states, reflecting the broader effort to ensure bipartisan collaboration in boosting battery-powered vehicles and battery production. The Energy Department has previously awarded loans to other key players in the EV industry, such as General Motors and LG Energy Solution, to finance the construction of lithium-ion battery cell manufacturing facilities.
This substantial loan demonstrates the government’s commitment to advancing battery technology and fostering domestic manufacturing capabilities. It marks a significant step forward in the United States’ pursuit of becoming a leader in the electric vehicle market.