The U.S. Energy Department on Monday said it has finalized a $9.63 billion loan to a joint venture of Ford Motor (F.N) and South Korean battery maker SK On to help finance construction of three new battery manufacturing plants in Tennessee and Kentucky.
The low-cost government loan for the BlueOval SK joint venture is the largest ever from the government's Advanced Technology Vehicles Manufacturing loan program. SK On is the battery unit of energy group SK Innovation (096770.KS).
The final award - first reported by Reuters - is one of a series of actions by the Biden administration to boost electric vehicle production before President-elect Donald Trump takes office next month.
The amount is higher than the $9.2 billion conditional commitment announced in June 2023 for the BlueOval project. Trump and his advisers have been critical of the Biden administration's efforts to incentivize EV production.
"This program is essential to getting people to choose the United States of America," said Jigar Shah, who heads the DOE Loan Programs office, in an interview. "When you look at the competition that we have from China, it is very clear to me that they have used low-cost debt for a very long time to promote a lot of manufacturing capacity that has hollowed out many communities in Kentucky, Tennessee, and other states around the country."
The joint venture is building battery manufacturing facilities in Kentucky and Tennessee that will enable more than 120 gigawatt hours of U.S. battery production annually.
BlueOval SK said it has invested more than $11 billion to date in the construction of the three 4-million-square-foot facilities and plans to begin production at the first Kentucky plant in 2025 and will be ready to begin production in Tennessee in late 2025.
Asked why it took nearly 18 months to complete the loan, Blue Oval SK said the DOE undertook rigorous due diligence that had to conduct technical, market, financial, credit, legal, regulatory, and other reviews.
Earlier this month, the DOE said it is planning to loan up to $7.54 billion to the StarPlus Energy joint venture of Chrysler-parent Stellantis (STLAM.MI) and Samsung SDI (006400.KS) to help build two EV lithium-ion battery plants in Indiana.
The conditional commitment award must still be finalized and includes $6.85 billion in principal and $688 million in capitalized interest
The DOE said last month it was proposing to loan Rivian up to $6.6 billion to build a plant in Georgia to begin building smaller, less expensive EVs in 2028.
In December 2022, the DOE finalized a $2.5 billion low-cost loan to a joint venture of General Motors (GM.N) and LG Energy Solution to help pay for three new lithium-ion battery cell manufacturing facilities in Ohio, Tennessee and Michigan.
