The U.S. Energy Department said on Thursday it gave preliminary approval for nearly $710 million in loans to electric vehicle (EV) technology manufacturing ventures, although the Biden administration still has $221.8 billion in loan capacity to fund clean-energy projects.
Jigar Shah, director of the energy department’s loan program office, told Reuters in Detroit that applications for $80 billion in financing have come to his office within the past two months from “very sophisticated players.”
In total, the department has disbursed $34.43 billion, as of Dec. 31, 2023. It received applications for $263.1 billion in loans, as of end-January.
The larger of two preliminary loan commitments announced on Thursday went to a unit of South Korean company SK Siltron, which could receive $544 million to expand a plant in Bay City, Michigan that produces high power silicon carbide electronics used in electric vehicles.
About 200 jobs each in the construction and production sectors could be created to handle the plant expansion, the department said in a statement.American Battery Solutions got conditional approval for a $165.9 million loan to expand its EV battery pack assembly operations in Springboro, Ohio and Lake Orion, Michigan. Both facilities could employ up to 460 people.
The projects and the jobs depend on the companies closing the loans and deploying the money. The U.S. Energy Department finalized in December 2022 a $2.5 billion loan to finance battery plant construction by a venture formed by General Motors and LG Energy Solution. But Ford and battery partner SK On have not finalized a proposed $9.2 billion energy department loan to build three U.S. battery plants.
“We’re fully anticipating they are going to close the loan,” Shah said.Energy Secretary Jennifer Granholm said last August that the agency would offer $10 billion in loans and another $2 billion in grants to help convert factories to build electric vehicles.”We hired specific people … to go beat the bushes to get people to use that,” Shah said. Many potential applicants are waiting in hope that they can win grants, he said.
The clean technology sector, including EVs, tumbled from euphoric levels of investment in 2021 and 2022 to “clearly a discipline year” in 2023, Shah said.
But he said his office will “lean into good risks,” such as lending to projects aimed at producing critical minerals used in batteries and electronics – a sector dominated by China.”
China is clearly oversupplying the market. Prices are down,” Shah said. But the government’s advisers believe “we are going to be short capacity of critical minerals in 2027.”
