SOCIALISM AMERIKAN STYLE
US resurrects green energy loan program that helped put Tesla on the map

First loan since 2010 goes to GM’s battery joint venture

By Andrew J. Hawkins@andyjayhawk 

 Jul 25, 2022,

Photo by MANDEL NGAN/AFP via Getty Images


The Department of Energy’s Advanced Technology Vehicles Manufacturing program, which famously helped put Tesla on the map, is set to hand out its first loan in over a decade. The department will announce a $2.5 billion loan to a joint venture of General Motors and LG Energy Solution to help fund the construction of a new lithium-ion battery manufacturing facility, the company confirmed. (The news was first reported by Reuters.)

The Advanced Technology Vehicles Manufacturing program, or ATVM has attained almost mythical status in the EV startup world thanks to its timely $465 million loan to Tesla, which is credited with helping save the company from an early death. Since then, a number of cash-strapped EV startups have also requested loans but to no avail; the program has basically been dormant since 2010.

ATVM HAS ATTAINED ALMOST MYTHICAL STATUS IN THE EV STARTUP WORLD THANKS TO ITS TIMELY $465 MILLION LOAN TO TESLA

The ATVM program was created by Congress under the administration of former President George W. Bush, allocating $25 billion “to provide low-cost debt capital for fuel-efficient vehicle and eligible component manufacturing in the United States.”

Other recipients include Ford and Nissan, both of which received much larger grants than Tesla. Ford got $5.9 billion to renovate factories across the country and improve its vehicles’ energy efficiency, and Nissan was given $1.45 billion to support production of its Leaf electric car. (Tesla and Nissan have both paid back their loans.)

Not all recipients are doing as well. Like Tesla, Fisker Automotive was once a promising producer of luxury electric cars. In 2010, the Department of Energy granted it $529 million, but funding was frozen in 2011 after it failed to meet milestones. Since then, the company has filed for bankruptcy, was later purchased by a Chinese auto parts supplier, and relaunched as Karma.

Notably, the ATVM program went dark around the same time that Republicans were ramping up their criticism of former President Barack Obama and his administration for its handling of another Department of Energy loan to Solyndra, a clean energy company that later went bankrupt. Ironically, Tesla was once derided as a “loser” by then-presidential candidate Mitt Romney, who compared the company to Solyndra. Tesla CEO Elon Musk now says he plans on voting for Republican candidates in the next election.

BUT IN ENSUING YEARS, DEMOCRATS HAVE LOST THEIR TREPIDATION OVER HANDING OUT GOVERNMENT-BACKED LOANS TO CLEAN ENERGY COMPANIES

But in ensuing years, Democrats have lost their trepidation over handing out government-backed loans to clean energy companies. President Joe Biden secured $5 billion for electric vehicle charging as part of his bipartisan infrastructure plan, much of which will be paid out in loans to EV charging companies (including Tesla). And while much of Biden’s climate agenda remains stalled in Congress, the resurrection of the ATVM program is a pot of money that’s still available to the administration to fund some of its priorities.

Unsurprisingly, GM is the recipient. Biden has lavished attention on the automaker, praising its plans to expand its manufacturing footprint and even test-driving the GMC Hummer EV. (“One hell of a vehicle,” Biden concluded.) GM formed the joint venture Ultium Cells with South Korea’s LG Energy Solution with the purpose of building new facilities in Ohio, Tennessee, and Michigan.

“These facilities will create more than 5,000 new high-tech jobs in the United States,” a spokesperson for Ultium Cells said in a statement. “We are grateful for the consideration and look forward to working with the Department of Energy on next steps.”

“[Loan Program Office’s] conditional commitment to Ultium Cells is the latest proof point of the Department’s ongoing efforts to help build a domestic supply chain to meet the growing demand for electric vehicles,” Jigar Shah, director of the DOE Loan Programs Office, said in a statement. “These new manufacturing facilities will create thousands of good-paying jobs across three states while enabling improvements in existing lithium-ion battery technologies.”

U.S. Energy Department set to loan GM battery joint venture $2.5 bln


David Shepardson
Publishing date:Jul 25, 2022 

WASHINGTON — The U.S. Energy Department on Monday announced it intends to loan a joint venture of General Motors Co and LG Energy Solution $2.5 billion to help finance construction of new lithium-ion battery cell manufacturing facilities.

The conditional commitment for the loan to Ultium Cells LLC for facilities in Ohio, Tennessee, and Michigan is expected to close in the coming months and comes from the government’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, which has not funded a new loan since 2010.

The plan, first reported by Reuters, would mark the Energy Department’s first loan exclusively for a battery cell manufacturing project under the vehicle program.

The program previously provided low-cost government loans to Tesla Inc, Ford Motor and Nissan, which included some cell manufacturing.

President Joe Biden has set a goal of 50% of U.S. auto production by 2030 being electric or plug-in electric hybrid vehicles.

“We have to have vehicle manufacturing capacity but also battery manufacturing capacity,” Jigar Shah, who directs the Energy Department loan program office, told Reuters in an interview. “This project provides one of the newest additions to battery manufacturing scale in this country.”

Ultium said in a statement the “facilities will create more than 5,000 new high-tech jobs in the United States. We are grateful for the consideration and look forward to working with the Department of Energy on next steps.”

In total, GM and LG are investing more than $7 billion via the venture to build three battery plants. Production at its Ohio battery plant is expected to begin in August, an Ultium spokeswoman said. The plant in Warren, Ohio currently has 700 workers.

Production is set to begin at its Tennessee plant in late 2023 and in Michigan in 2024.

“The goal is to… help these companies move faster and farther than they otherwise would have,” Shah said. The loan agreement requires Ultium to offer employees the local prevailing wage and fringe benefits.

In April, the Energy Department said it had issued a conditional commitment for a $107 million loan to graphite miner Syrah Resources to expand an electric vehicle battery parts plant in Louisiana.

Shah said the department has received more than $18 billion in loan requests from the auto program and expects at least another $5 billion in requests that are being actively prepared.

“I do think there will more loans issued,” Shah said, declining to offer a precise timeline.

The program currently has $17.7 billion in lending authority available. Shah said “for motivated borrowers, they can close these loans rather quickly.”

Australia-based Syrah plans to use the loan to expand the Louisiana plant that will process graphite mined from Mozambique into anodes, the positively charged electrode of a battery. The facility is expected to produce enough anodes for 2.3 million EVs by 2040.

In February, the Energy Department said it plans to provide $2.91 billion in grants to boost production of advanced batteries, fund battery materials refining and production plants, battery cell and pack manufacturing facilities, and recycling facilities.

 (Reporting by David Shepardson in Washington Editing by Mark Potter and Tomasz Janowski)