U.S. Energy Department Commits $9.2 Billion Loan for Ford-SK Joint EV Battery Project

The U.S. Energy Department’s Loan Programs Office has announced a conditional commitment of up to $9.2 billion for three manufacturing facilities to supply batteries for Ford Motor Company’s future Ford and Lincoln electric vehicles. The office approved the conditional loan for BlueOval SK LLC, a joint venture of Ford Motor Company and SK On, a Korean EV battery manufacturer. The plants, to be located in Tennessee and Kentucky, would facilitate over 120 gigawatt hours of U.S. battery production per year, potentially displacing 455 million gallons of gasoline.

This project will generate approximately 5,000 construction jobs and 7,500 operations jobs in the two states. The loan supports President Biden’s agenda for onshoring and re-shoring domestic manufacturing of clean energy technologies that aims to expand American-made battery production, a critical step towards the administration’s goals of increasing EV sales, achieving net-zero electricity by 2035, and a net-zero economy by 2050.

Among other recent actions to support the EV market, the Biden administration has finalized the Build America, Buy America implementation plan for EV charging equipment and announced the first public and private commitments to support electrification efforts under the EV Acceleration Challenge. The U.S. Treasury Department and the Internal Revenue Service (IRS) have released proposed guidance on the new clean vehicle provisions of the 2022 Inflation Reduction Act (IRA) aimed to spur manufacturing in the U.S. and strengthen supply chains. Since the passage of the act, at least $45 billion in private-sector investment has been announced across the U.S. clean vehicle and battery supply chain.

The conditional commitment, under the Advanced Technology Vehicles Manufacturing, or ATVM, loan program, is part of the department’s efforts to strengthen the domestic supply chain for electric vehicles. The ATVM program supports projects related to fuel-efficient vehicles and eligible component manufacturing. This commitment reflects the department’s intent to finance the project, but additional steps and conditions must be fulfilled before the final loan is granted.

The proposed facilities would bolster the domestic battery supply chain that aligns with the Justice40 Initiative, which aims to ensure 40 percent of benefits of climate and energy investments go to disadvantaged communities.