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GM And LG Energy Partnership For EV Battery Production

The administration is making it easier for Americans to move towards electric vehicles over the next decade, as evidenced by the resources it is directing toward ramping up EV and battery production. One such initiative is a $2.5 billion loan from the U.S. Department of Energy, which will go toward a battery partnership owned by U.S. automaker General Motors and South Korean battery maker LG Energy Solution.

The joint venture between GM and LG Energy, called Ultium Cells, will use the money to manufacture batteries in Ohio, Tennessee, and Michigan. The three facilities are expected to create more than 5,000 new high-tech jobs as well 6,000 construction jobs.

Photo Courtesy Ultium Cell

The loan is conditional on meeting certain criteria and is being made under the federal government’s Advanced Technology Vehicle Manufacturing (ATVM) loan program, which also provided a $465 million loan to help Tesla produce its first sedan, the Model S. It’s the program’s first such loan in 12 years, according to the Green Car Reports website, and the first ever for a battery cell manufacturing project.

Video Courtesy U.S. Department of Energy 

The ATVM program was established under the George W. Bush administration to provide low-interest loans to help companies make energy-efficient vehicles. The program has $17.7 billion in loan authority but has so far loaned less than half of that. It is expected to become much more active as the Biden administration moves forward with its $1 trillion infrastructure plan, which aims to put billions of dollars into EVs, batteries, and charging stations.

Photo Courtesy GM

As Green Car Reports noted, the ATVM program isn’t focused exclusively on EVs. The largest loan so far, for $5.9 billion, went to Ford to produce more of its smaller EcoBoost turbocharged gasoline engines. However, most of the rest of the loans have favored EV production. That includes the loan to Tesla, which enabled the world’s largest EV maker to scale up production of its Model S.

Providing a loan to a battery company aligns with the federal government’s aim to make it easier for EV manufacturers to produce cars domestically. The ultimate goal is to help meet Biden’s target of having EVs and plug-in electric hybrid vehicles make up 50% of U.S. auto production by 2030.

“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.”

GM and LG are investing more than $7 billion via the Ultium venture to build the three battery plants. Production at the Ohio plant was expected to begin in August. Production at the Tennessee plant is expected to begin in late 2023, while production at the Michigan plant should start in 2024. The loan agreement requires Ultium to offer employees the local prevailing wage and fringe benefits.

Photo Courtesy Ultium Cell

The GM-LG announcement followed a similar announcement in April when the Department of Energy said it issued a conditional commitment for a $107 million loan to graphite miner Syrah Resources to expand an EV battery parts facility in Louisiana.

Shah told Reuters the DOE 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 be more loans issued,” Shah said, though he didn’t offer an exact timeline.


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