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US Govt. issues $2.5B loan to GM & LG Energy JV for new battery plants

US Govt. issues $2.5B loan to GM & LG Energy JV for new battery plants

The US Department of Energy (DOE) has reportedly restarted a former loan program and the joint venture between the US automotive firm General Motors and the South Korean storage battery manufacturer LG Energy Solution is the first recipient to benefit from this program.

The $2.5 billion loan will be used to help fund the construction of the latest lithium-ion battery cell production plants for GM and LG Energy Solution.

The loan to the GM-LG joint venture named Ultium Cells is slated to be finalized in the upcoming months and will be utilized for the company's upcoming plants in Tennessee, Ohio, and Michigan. GM and LG intend to invest over $7 billion to build three battery sites together.

While production at the Ohio plant is set to start in August, production is expected to begin in Tennessee in late 2023 and in Michigan in 2024.

Ultium claims that the facilities will generate 5,000 new high-tech jobs in the United States. According to the financing arrangement Ultium has to provide employees with the local prevailing pay and fringe benefits.

The funds come from the Advanced Technology Vehicles Manufacturing (ATVM) loan program of the government, which was meant to provide up to $17.7 billion in federal loans but has not issued any new loan since 2010.

In response to a de-globalizing the world after COVID, joint partnerships between automobile companies and battery chemistry and cell makers have started emerging locally in recent years. Governments in South Korea, Germany, and China have all started to financially support domestic battery manufacturers in order to bolster supply chains.

The reintroduced department of energy loan program shows that the Biden Administration is also seeking to protect its supply chain as part of its ambition for EVs to account for half of all new passenger vehicle sales by 2030.

Source credit: https://techcrunch.com/2022/07/25/gm-joint-venture-to-receive-2-5b-government-loan-for-u-s-battery-plants/

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Meghna Singh

An English Literature graduate, Meghna Singh ventured into the profession of content development to incorporate her knack for writing articles across verticals including technology, healthcare, business, and alike for News Origins and RunningAfrica. She has also completed her MBA in Tourism and worked as a content creator in the field of product development.