Ford Joint Venture Receives $9.2 Billion Loan Approval for Battery Plants
NEW YORK – A joint venture between Ford Motor and SK On, a South Korean battery manufacturer, known as BlueOval SK, is set to receive up to $9.2 billion in U.S. federal loans to build three new battery plants for electric vehicles. The loan approval comes under a program backed by U.S. President Joe Biden, who has been a strong advocate for large public investments in initiatives to combat climate change and boost U.S. manufacturing.
The U.S. Department of Energy announced a “conditional loan commitment” to BlueOval SK, which plans to construct the new plants in the southern U.S. states of Tennessee and Kentucky. This loan would be the largest in the history of the Advanced Technology Vehicles Manufacturing program, according to U.S. officials.
Ford Treasurer Dave Webb expressed his support for the loan, stating that it would accelerate the adoption of electric vehicles while creating thousands of high-paying jobs and supporting American manufacturing. Webb emphasized the importance of collaboration between the public and private sectors in driving major technology transitions.
The electricity generated from batteries produced at these plants is expected to replace more than 455 million gallons of gasoline over the lifespan of the vehicles, according to the Department of Energy. Additionally, the projects will create 5,000 construction jobs and 7,500 operational jobs once the facilities are operational.
President Biden has set a target date of 2030 for electric vehicles to account for at least 50 percent of the new car market. To support this goal, he has also advocated for large public investments in new EV charging stations and tax credits for EV purchases. The Inflation Reduction Act 2022 has tied tax incentives to the requirement that batteries and critical resources in electric vehicles be of North American origin.
The joint venture between Ford and SK Innovation was unveiled in September 2021, with plans to invest $11.4 billion in a battery plant in Stanton, Tennessee, and two facilities in Glendale, Kentucky. Ford has announced that production at these plants will begin in 2025. However, the automaker has not provided details on how the loan amount relates to the previous $11.4 billion investment.
The conditional acceptance of the loan by the Department of Energy follows a due diligence process that involved external experts reviewing the application and developing a term sheet. The final credit is contingent on meeting additional conditions, including local authority approval.
In the case of the BlueOval project, the White House is calling for strong labor contracts and support for the Biden administration’s “Justice40 initiative,” which aims to ensure that 40 percent of the total benefits go to disadvantaged communities. The Tennessee site and the communities surrounding the Kentucky sites are considered disadvantaged, according to the agency.
With this significant loan approval, the Ford joint venture is poised to make substantial contributions to the electric vehicle industry, job creation, and the fight against climate change.
How does the partnership between Ford and SK On contribute to the Biden administration’s goal of achieving net-zero carbon emissions by 2050
Ne per year, reducing greenhouse gas emissions by approximately 5 million metric tons. This is aligned with President Biden’s goal of achieving net-zero carbon emissions in the U.S. economy by 2050 and transitioning the country to clean energy.
The loan approval is seen as a significant step towards achieving the Biden administration’s ambitious climate and manufacturing goals. It also demonstrates the government’s commitment to supporting the development and production of electric vehicles in the U.S. The funding will enable the construction of advanced battery plants, which are crucial for expanding the production capacity of electric vehicles and making them more accessible to consumers.
BlueOval SK is a joint venture that combines Ford’s expertise in automotive manufacturing with SK On’s knowledge and experience in battery technology. This partnership will help accelerate the development of advanced battery technologies and facilitate the mass production of batteries for electric vehicles.
The construction of the new plants will not only create a significant number of well-paying jobs but also support the local economies in Tennessee and Kentucky. The investment in these states will further solidify the U.S. as a leading player in the electric vehicle industry, fostering innovation and driving economic growth.
In conclusion, the $9.2 billion loan approval for the Ford joint venture with SK On marks a major milestone in the expansion of electric vehicle production and the transition to clean energy in the U.S. The investment will not only support the growth of the electric vehicle market but also contribute to job creation and emission reductions. With the government’s support, the partnership between Ford and SK On is primed to play a crucial role in shaping the future of the automotive industry.
This joint venture between Ford and SK on securing a massive federal loan for battery plants is a gamechanger in the automotive industry. It highlights the urgent need for sustainable vehicle solutions and signals a promising future for electric vehicles.