Biden Admin Grants $2.5 Billion Loan to GM, LG Energy Solution to Build EV Battery Cell Factories

A Chevrolet Bolt EV vehicle on the assembly line at General Motors Orion Assembly in Lake Orion, Michigan, on March 19, 2018. Rebecca Cook/File Photo/Reuters

The U.S. Department of Energy (DOE) announced on Monday the closing of a $2.5 billion loan to Ultium Cells LLC, a joint venture between General Motors and South Korea’s LG Energy Solution, aimed at financing the construction of three new lithium-ion battery cell factories.

In a statement, the DOE said the loan will reinforce the “Biden-Harris Administration’s commitment to strengthening American manufacturing and our domestic supply chains.”

The three new factories will be built in Ohio, Tennessee, and Michigan, according to officials, and will produce lithium-ion battery cells for electric vehicles (EVs) amid the Biden administration’s effort to push for more Americans to drive EVs.

Ultium Cells LLC has factories currently under construction in Lansing, Michigan, and Spring Hill, Tennessee.

According to the DOE, the loan will help create approximately more than 11,000 “good-paying jobs” across the three facilities, including 6,000 in construction and 5,100 in operations.

The loan, which was issued by the DOE through its “Loan Programs Office” marks the first closed loan exclusively for a battery cell manufacturing project under the Advanced Technology Vehicles Manufacturing program, officials said.

General Motors assembly workers connect a battery pack underneath a partially assembled 2018 Chevrolet Bolt EV vehicle on the assembly line at Orion Assembly in Lake Orion, Mich., on March 19, 2018. Rebecca Cook/Reuters

Biden Pushes for Increased EV Use

LG Energy Solutions is also partnering with Japanese automaker Honda on a joint venture to build a battery factory in Fayette County, Ohio, where the two companies will commit to investing up to $4.4 billion.

The latest announcement comes as President Joe Biden continues to push Americans to turn away from traditional combustion engine vehicles and towards EVs, which are significantly more expensive, in an effort to reduce pollution and achieve his goal of ensuring that half of all new vehicles sold in 2030 are electric or plug-in electric hybrids.

According to the DOE, the loan to Ultium Cells LLC “directly” supports that goal.

In October, Biden launched the American Battery Materials Initiative, which the White House says is a “new whole-of-government effort to secure a reliable and sustainable supply of the critical minerals that power everything from electric vehicles to homes to defense systems.”

In that same month, the administration announced it is awarding $2.8 billion in grants from the Bipartisan Infrastructure Law to 20 manufacturing and processing companies across 12 states to bolster the battery mineral and material supply chain.

Biden has also granted $5 billion over five years to all 50 U.S. states to begin constructing a nationwide network of thousands of EV chargers, covering approximately 75,000 miles of highway across the country.

U.S. Vice President Kamala Harris speaks with SemaConnect CEO Mahi Reddy at the Prince George's County Brandywine Maintenance Facility during a visit to announce the Biden administration’s Electric Vehicle Charging Action Plan, in Brandywine, Maryland, on Dec. 13, 2021. Kevin Lamarque/Reuters

Loan Will ‘Jumpstart’ Domestic Battery Cell Production

“DOE is flooring the accelerator to build the electric vehicle supply chain here at home—and that starts with domestic battery manufacturing led by American workers and the unions that support them,” said U.S. Secretary of Energy Jennifer M. Granholm in a statement. “This loan will jumpstart the domestic battery cell production needed to reduce our reliance on other countries to meet increased demand and support President Biden’s goals of widespread EV adoption and cutting carbon pollution produced by gas-powered vehicles.”

The Consumer Reports 2022 Annual Auto Reliability, published in November, found that electric vehicles, including those from Tesla, are among some of the least reliable sold in the United States, while hybrid vehicles and mid-sized or large and gas-powered sedans are among the most reliable.

Additionally, automotive research company Kelley Blue Book found that new electric vehicle prices increased 2 percent from October to November, and are up 9 percent year-on-year, with Americans having to splash out on average $65,041 for an EV.

This, according to Kelley Blue Book estimates, is well above the industry average and aligns more with luxury prices as opposed to mainstream prices.

Meanwhile, the average price paid in November for a new non-luxury vehicle was $44,584, although the automotive company notes that this is still up $330 month over month due to soaring inflation.

Despite this, the White House says that EV sales in the United States have tripled since Biden took office.