On December 17, 2024, the US Department of Energy announced that it has provided a $9.63 billion loan to a joint venture between Ford Motor Company and South Korean battery manufacturer SK On to fund the construction of three new battery manufacturing plants in Tennessee and Kentucky.
The federal government’s low-cost loan to the BlueOval SK joint venture marks the largest loan in the history of the Advanced Technology Vehicles Manufacturing loan program. SK On is the battery division of the energy group SK Innovation.
The final disbursement, first reported by Reuters, is part of a series of actions taken by the Biden administration before the inauguration of President Donald Trump next month, aimed at promoting electric vehicle production.
This amount exceeds the $9.2 billion conditional commitment announced for the BlueOval project in June 2023. Trump and his advisors have criticized the actions taken by the Biden administration to boost electric vehicle production.
Jigar Shah, head of the DOE’s Loan Programs Office, stated in an interview that “this program is crucial to attracting people to choose to come to America. When we look at competition from China, I see very clearly that they leverage low-cost debt to boost significant manufacturing capacity, which has drained many communities in Kentucky, Tennessee, and other states nationwide.”
Currently, the joint venture is constructing battery manufacturing facilities in Kentucky and Tennessee, which will produce over 120 gigawatt hours of American-made batteries annually.
BlueOval SK has already invested over $11 billion in building three 4 million square foot facilities, with plans to begin production at the first factory in Kentucky in 2025, and in Tennessee by the end of 2025.
When asked why it took nearly 18 months to secure the federal loan, BlueOval SK stated that the Department of Energy conducted rigorous due diligence, including reviews of technology, market, finance, credit, legal, and regulatory aspects.
Earlier this month, the DOE announced plans to provide up to $7.54 billion in loans to a joint venture between Stellantis, the parent company of Chrysler, and Samsung SDI’s StarPlus Energy for the construction of two lithium-ion battery factories for electric vehicles in Indiana.
The conditional commitment loans incentives are still pending final determination, including $6.85 billion principal and $688 million capitalized interest.
Last month, the Department of Energy announced plans to provide up to $6.6 billion in loans to Rivian for building a factory in Georgia and commencing production of smaller, more affordable electric vehicles starting in 2028.
In December 2022, the DOE finalized a $2.5 billion low-cost loan to a joint venture between General Motors and LG Energy Solutions for the construction of three new lithium-ion battery production facilities in Ohio, Tennessee, and Michigan.