Ford will receive $9.2 billion as part of a conditional loan from the U.S. Department of Energy to help build three massive electric vehicle battery plants, the agency announced Thursday. The massive loan represents the largest government offer to an automaker since the bailouts that followed the Great Recession of 2009.
The loans are part of a broader effort by the Biden administration to boost electric car production as it races to catch up with China, which controls about three-quarters of global battery production. It’s also a key part of the White House’s plan to promote clean energy amid the deepening climate crisis.
The loans are part of a broader effort by the Biden administration to boost electric vehicle production
Exhaust emissions from passenger cars and commercial vehicles account for about one-third of all greenhouse gases and are major contributors to climate change. By increasing EV sales, elected officials hope to keep global warming below 1.5 degrees Celsius, as stipulated in the Paris agreement.
Ford has said it would spend $11.4 billion with South Korean battery maker SK Innovation to build three battery factories — two in Kentucky and one in Tennessee. Through a joint venture called BlueOvalSK, the two companies aim to build out enough capacity to deliver 129 GWH of capacity each year, which would be enough to power 2 million electric cars annually by 2026.
Created by Congress under former President George W. Bush, the ATVM program has allocated $25 billion “to provide low-cost debt capital for the production of fuel-efficient vehicles and eligible components in the United States. ” In addition to Tesla, Nissan has also received money through the program.
In fact, Ford has too. In 2009, at the height of the recession, the company received $5.9 billion to renovate factories across the country and improve the energy efficiency of its vehicles. Part of the plan involved retooling the factories to make more fuel-efficient compact cars instead of big gas guzzlers.
Tesla and Nissan have both repaid their loans, but Ford struggled to remove debt from the balance sheet. Documents filed by Ford show that the company owed payments of $591 million in 2020, $591 million in 2021 and $289 million in 2022. As of this year, the loan has been fully repaid. But the compact cars it built with the original loan have since been discontinued.
