- Ford Motor Co. secures $9.2 billion government loan for EV battery factories.
- Loan supports President Biden’s green technology plan and US industrial strategy to compete with China in EV and battery production.
- Ford aims to produce 2 million EVs by 2026.
Ford Motor Co. has secured a conditional $9.2 billion loan from a US government programme
The loan is the largest government backing for a US automaker in over a decade. It marks a watershed moment for President Joe Biden’s plan to go all-in on green technologies and help American manufacturers catch up to China.
The estimated cost for Ford’s three-factory buildout, along with an adjacent EV assembly unit, amounts to $11.4 billion. Taxpayers will provide low-interest financing for most of the cost, as BlueOval (the joint venture) had previously received subsidies from state governments.
President Biden signed the Inflation Reduction Act (IRA) into law in August 2022, with the goal of promoting green technology investment in the US. The Act allocates $369 billion in subsidies through grants, loans, and tax credits to both public and private entities, encouraging advancements in sustainable technologies.
Ford’s Ambitious EV Production Plan
The loan to Ford Motor Co. will support the construction of three battery factories already underway in Kentucky and Tennessee. The development, dubbed ‘Blue Oval City’, is intended to be the EV production hub of the US.
These factories, owned by Ford and SK On Co., a South Korean battery manufacturer, will play a vital role in Ford’s ambitious expansion into electric vehicles (EVs). Ford aims to produce up to 2 million EVs by 2026, a remarkable increase from the 132,000 EVs produced last year.
The $9.2 billion loan from the US Department of Energy’s Loan Programs Office (LPO) has been granted to Ford to support its expansion into the EV market. This loan will also contribute to the broader US industrial strategy.
Supporting the US Industrial Strategy
The LPO’s loan is a key component of the US government’s industrial strategy. The strategy aims to boost domestic manufacturing capabilities in critical sectors and counter China’s dominance in EV and battery production.
The introduction of the Inflation Reduction Act (IRA) has facilitated government support for clean-energy manufacturing. Consequently, there has been a surge in battery and EV production projects across the US.
Domestic Manufacturing Priorities
The Inflation Reduction Act prioritizes domestic manufacturing and assembly of battery packs to boost US EV sales.
While the US still relies on imported refined metals, the government’s focus on building a robust domestic supply chain for EV production demonstrates its commitment to developing strategic industries within the country. The loan to Ford aligns with this priority, providing the necessary funding to enable a capital-intensive transition to EVs.
Ford’s receipt of the conditional $9.2 billion loan from the US government signifies a historic milestone. It highlights the nation’s push for a greener and more competitive automotive industry. With this financial backing, Ford is accelerating its transition to EVs and contributing to the country’s sustainable future.