US to provide billions for EV & battery manufacturers
The US government is providing up to $12 billion to help automakers retrofit existing plants to produce electric and hybrid vehicles. Another $3.5 billion is to go toward a new round of funding for the production of batteries and battery materials.
Turning first to auto production, the up to $12 billion for retrofitting existing plants is made up of the previously announced $2 billion in direct grants under the Domestic Manufacturing Conversion Grants and up to $10 billion in loans that can be accessed under the Advanced Technology Vehicles Manufacturing Loan Program. According to the US Environmental Protection Agency (DoE), the pot from which companies receive funds “depending on their capital needs.”
The program for granting direct subsidies is based on the Inflation Reduction Act and is intended to support the domestic production of e-vehicles and components. Suppliers are also eligible to apply. Preference is to be given to projects in which either production facilities are being rehabilitated or converted, or plants that have recently ceased operations or are expected to cease operations in the near future. The goal, according to the government, is to preserve existing jobs. Project outlines can be submitted until October 2, 2023, and full applications until Dec. 7, 2023.
This initiative is flanked by a loan program worth up to $10 billion under the Advanced Technology Vehicles Manufacturing Loan Program. Again, whether applicants “retain quality jobs in communities where manufacturing facilities are currently located” will play a role in the award. Rewards include “maintaining high wages and benefits, including workplace rights, or commitments such as keeping the existing plant open until a new plant is completed in the case of plant replacement projects.”
The US government is also holding out the prospect of a second round of funding to support the production of advanced batteries and battery materials, for which around 3.5 billion US dollars are to be made available. The announcement is still a “Notice of Intent” and does not yet include a concrete call for funding. The aim is to “to expand domestic manufacturing of batteries for electric vehicles and the nation’s grid, as well for battery materials and components currently imported from other countries,” the DoE wrote.
President Joe Biden is trying to pick up the pace of change in the automotive industry through his legislative initiatives. He signed the Inflation Reduction Act in August 2022. At the time, this included a reform of the tax credit for electric vehicles. The Act basically combines incentives for consumers and businesses to purchase clean vehicles with programs to expand the manufacturing and sourcing of vehicle components and key minerals in the United States.
The incentives included in the IRA complement federal investments from the Bipartisan Infrastructure Law (which is now feeding the second round of funding for batteries and battery materials) and other federal initiatives to spur domestic manufacturing of electric vehicles and batteries and the development of a national charging network.