General Motors and LG could be the first companies in 12 years to get a loan under the federal government’s Advanced Technology Vehicle Manufacturing (ATVM) loan program, news initially reported by Reuters, citing information from officials.
The U.S. Department of Energy confirms a conditional loan to Green car reportwith more details on the deal to come later in the day.
According to one release currently in existence, the $2.5 billion loan will help finance the construction of new lithium-ion battery manufacturing facilities in Ohio, Tennessee and Michigan. The three facilities – possibly those already announced by the companies – are expected to create 5,100 operations jobs and 6,000 construction jobs.
LG Energy Solution and GM have been partners in Ultium Cells LLC, the company that builds large-format pocket cells that underpin the automaker’s Ultium EV architecture. Ultium Cells LLC also builds manufacturing plants to scale up cell production for mass-market electric vehicle models. Another joint venture, with South Korea’s Posco Chemical, will help supply raw materials to manufacturing facilities.
DOE’s conditional commitment to Ultium Cells for $2.5 billion ATVM loan
Based on the report, it’s not entirely clear whether the ATVM loan can be passed on to Ultium Cells or collectively to other companies. The ATVM program, overseen by the U.S. Department of Energy, was established during the George W. Bush administration — activated in 2007 and funded in 2008 — to provide low-interest loans to help companies produce vehicles that are significantly more energy efficient than the vehicles they replace .
General Motors Ultium Battery
The Authorized Lending Program lends $17.7 billion and has lent $8 billion to date. Although it was announced that the program was effectively relaunched in 2014 and around to emphasize suppliers more than automakers, no new loans were allowed. The program started again recently through last year’s infrastructure package.
GM and LG have encountered some potential frictions in their long-standing supply relationship. Last year, LG agreed reimburse GM $1.9 billion of the estimated total cost of $2.0 billion for the recall of approximately 140,000 Chevrolet Bolt EVs, including several complete replacement battery packs.
The ATVM program does not necessarily focus on electric vehicles. For example, Ford used the largest of these loans to date — $5.9 billion — as a leap to produce many of its smaller EcoBoost turbocharged gasoline engines. However, the rest of the loans favor EV technology or electrification. Nissan, for example, used a loan to set up Leaf production in the US
Tesla is perhaps the biggest success story of the loan program. It paid off the entire loan it was granted in 2009, in May 2013, several years earlier. It is a sensitive topicat a time when GM and Chrysler are struggling financially, but without it, Tesla probably wouldn’t be able to scale up Model S production.
Fisker Atlantic Design Prototype – New York Auto Show 2012
Fisker Automotive, on the other hand, was the program’s highest failure, and one of the incidents was closely tied to then-Vice President Biden, who had casually laid out Fisker’s product plan. Fisker only received $192 million from the original Loan of 529 million USD Before it defaulted, the federal government ended up recovering only a fraction of it.
While foreign ownership is accepted, the project must be entirely in the United States and the applicant must demonstrate a “reasonable prospect of repayment.”
Production Design Aptera 2e
There have been well-known disclaimers, including Brammo (electric motorcycles) and Coda Automotive (affordable electric vehicles that use vehicles partly made in China). Aptera (high-performance tricycle) and Bright Automotive (plug-in hybrid truck) were approved before any approval, presumably in response to the “reasonable prospect” clause. their own.
The GM/LG app isn’t the first in years. Mullen Automotive also reported in April that it had applied for an ATVM loan to build electric cargo trucks in Mississippi.
The DOE also made it clear that the Ultium deal has yet to be implemented. “While this conditional commitment represents the Department’s intention to finance the project, there are still certain steps and conditions that must be met before the Department issues the final loan.”
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This article was originally published at 3:20 p.m. ET and updated at 10:50 p.m. ET to provide additional information about conditional commit.
