Ultium Cells -- a joint venture between LG Energy Solution and General Motors -- has secured a $2.5 billion (3.27 trillion won) loan from the US Department of Energy to help finance the construction and expansion of three electric vehicle battery manufacturing facilities in Ohio, Tennessee and Michigan, officials said Tuesday.
According to the Energy Department, the announcement marked the first finalized loan exclusively for a battery cell manufacturing project under the Biden Administration’s Advanced Technology Vehicles Manufacturing program.
LG Energy Solution said the interest rate of the US government loan is on par with the 10-year US Treasury yield of about 3.6 percent, approximately two percentage points lower than the rate a company with an AA rating would receive in the Korean bond market.
“In order to establish stable production capabilities in the North American battery market, which is expected to have the fastest growth rate, it is imperative to secure large-scale investment funds,” an LG Energy Solution official said.
“Amid the extremely difficult environment to secure investment due to recent rate hikes and economic slowdown, we have gained a foothold to continue our distinguished growing trend in the US by securing a long-term fund with a low-interest rate,” the official added.
Ultium Cells’ first plant in Ohio began production in August. The company is projected to have a total capacity of 145 gigawatts-hour per year once both the second and third EV battery manufacturing plants in Tennessee and Michigan, respectively, begin operation by 2025. It would be enough to power about two million high-performance EVs annually, according to the South Korean battery maker.
General Motors CEO Mary Barra previously said the carmaker and LG Energy Solution would announce the location of their fourth US battery cell plant in the first half of this year during the earnings call in February. But no official announcements have been made so far.
According to Reuters, the joint venture is considering the state of Indiana as a site for its fourth battery manufacturing plant in the US. LG Energy Solution has denied the report, saying nothing has been confirmed about the construction of a fourth battery plant.
The three cell manufacturing facilities are expected to create more than 11,000 jobs for the local employment market, according to the Energy Department.
“This loan will jumpstart the domestic battery cell production needed to reduce our reliance on other countries to meet increased demand and support President Biden’s goals of widespread EV adoption and cutting carbon pollution produced by gas-powered vehicles,” said Secretary of Energy Jennifer Granholm.
Meanwhile, Granholm hosted a roundtable with leadership from federal and local government, industry and labor to officially launch the Department of Energy’s Battery Workforce Initiative in Dearborn, Michigan, on Monday, local time.
Representatives from the South Korean battery makers -- Chun Sei-won, CEO and Samsung SDI America, and Denise Gray, head of external affairs and government relations at LG Energy Solution Michigan -- took part in the meeting to discuss ways to build sustainable relationships among all stakeholders in the quickly-growing battery sector.