Ford Motor Co. is tentatively approved for a record Department of Energy loan of up to $9.2 billion to support construction of three electric-vehicle battery factories the automaker is building in Kentucky and Tennessee, showing how federal officials are prioritizing domestic supply chain production to compete with China.
Ford plans to use the proceeds from the conditional loan to finance the construction of two plants in Glendale, Kentucky, and one in Stanton, Tennessee. All three projects are part of Ford's joint venture with SK On, a South Korean battery manufacturer, called BlueOval SK LLC.
Ford must obtain permits and approval from certain local officials and private-sector entities before the loan is closed, according to the Energy Department. Terms of the loan were not disclosed but the interest rate is expected to be the same as the federal government pays to borrow from investors, making it more favorable than a typical construction loan with a private lender.
Automakers are rushing to develop plants to make electric vehicles and the lithium-ion batteries that power them, with at least $65 billion in announced projects in the U.S., according to a recent estimate by mining company Piedmont Lithium. The Biden administration set a goal for at least half of all U.S. new-car sales to be electric models by 2030.
Ford's conditional federal loan was arranged by the Energy Department’s Loan Programs Office, which has provided more than $30 billion of loans to energy projects nationwide, including solar and wind power and sustainable energy storage, since it was founded in 2005. Ford's loan is the program's single largest investment in its history.
The federal loan will support Ford’s BlueOval projects, valued at a combined $11.4 billion, which are expected to open in 2025 and produce 120 gigawatt-hours of battery capacity yearly and displace more than 455 million gallons of gasoline per year, the Energy Department said. The projects are expected to create 5,000 construction jobs in Tennessee and Kentucky and 7,500 operations jobs once the plants are up and running.
The loan “is going to help make great EVs available to more customers while powering thousands of good paying jobs and American manufacturing,” Ford Motor Treasurer Dave Webb said in a statement.
Loan Program
Ford's loan is from the Energy Department's Loan Programs Office's funds slated for advanced technology vehicle manufacturing projects that improve fuel economy. The lending program for manufacturing advanced vehicles has officially issued loans valued at nearly $10 billion, according to the Energy Department.
Ford is not a stranger to the program: The automaker was issued a $5.9 billion loan in September 2009 to upgrade 13 facilities across six states. Ford fully repaid the loan in June 2022, according to the Energy Department.
Ford’s newly announced conditional loan for up to $9.2 billion tops the $2.5 billion loan that the Energy Department gave last year to Ultium Cells, the electric-vehicle battery joint venture between General Motors and LG Energy. Ultium is developing three battery manufacturing facilities in Michigan, Ohio, and Tennessee.
Redwood Materials, a company led by a former Tesla executive, received a conditional commitment for a $2 billion loan from the program in February to expand its battery materials campus near Reno, Nevada.
The Energy Department's lending program for manufacturing advanced vehicles has a lending capacity of $17.7 billion currently available, according to the government.