General Motors’ joint venture with LG Energy Solution is on track to receive a multibillion-dollar loan from the U.S. government to build battery cell plants for electric vehicles, including one going up in Lansing.
On Monday, the Department of Energy announced “a conditional commitment” for $2.5 billion to GM and LG’s 50-50 joint venture called Ultium Cells LLC.
“While this conditional commitment demonstrates the Department’s intent to finance the project, several steps remain, and certain conditions must be satisfied before the Department issues a final loan,” the DOE said in a blog posted Monday.
The DOE declined to comment on the specific conditions that must be met, but a person familiar with the loan said it “specifies additional steps the applicant must take, which include fulfilling remaining legal, contractual, technical and financial requirements, before the Department will issue a loan.” The person asked to not be named, saying they are not authorized to share any additional details because the specifics are confidential.
The loan will come from the department’s Advanced Technology Vehicles Manufacturing program, which provides loans to support U.S. manufacturing of light-duty vehicles, parts and other materials that improve fuel economy. The person could not say when the loan is expected to close because timing varies based on the status of the projects. But public information on the DOE website shows a recent unrelated loan reached financial close in less than two months.
Ultium Cells had allotted about $2 billion for the construction of each plant, but GM spokesman Jim Cain explained why Ultium Cells would still desire a loan.
“The commitments GM and LG have made to fund the Ultium Cells LLC joint venture don’t preclude the joint venture from pursuing a loan under a program designed to advance clean energy technology,” Cain wrote in an email to the Free Press. “Assuming the loan is approved, it would have the effect of lowering the amount of capital the joint venture partners would need to fund directly. Ultium Cells will repay the loans with proceeds earned by selling its cells to GM.”
The program has given previous loans to Tesla Inc., Ford Motor Co. and Nissan, according to Reuters, which first reported the news.
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Ultium Cells LLC spokeswoman Brooke Waid confirmed the loan to help pay for the construction of its battery cell factories going up in Ohio, Tennessee and Michigan.
“These facilities will create more than 5,000 new high-tech jobs in the United States,” Waid said in a statement. “We are grateful for the consideration and look forward to working with the Department of Energy on next steps.”
GM is investing $35 billion in EV and self-driving vehicle technology by 2025 with plans to offer an all-electric lineup by 2035 and be a carbon neutral company by 2040.
The Ultium Cells plant in Lordstown, Ohio, will make battery cells for EVs assembled at Factory Zero in Detroit and Hamtramck starting next month. Ultium Cells is also building a plant in Spring Hill, Tennessee, that is expected to start running next year and provide battery cells to Spring Hill Assembly where GM just started building the Cadillac Lyriq all-electric SUV.
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In January, GM said it will invest $7 billion in four manufacturing facilities in Michigan, making the state the “hub” of EV development and manufacturing.
That includes spending $2.6 billion to build a new Ultium Cells battery factory on 590 acres adjacent to GM’s Lansing Delta Township Assembly plant. Ultium Cells Lansing will create more than 1,700 new jobs when it is fully operational, GM has said. Site preparations are happening now and battery cell production is scheduled to begin in late 2024.
The DOE statement said in its blog that this would be the first loan exclusively for a battery cell manufacturing project under the advanced tech program. Earlier this year, Energy Secretary and former Michigan Gov. Jennifer Granholm said, “As electric cars and trucks continue to grow in popularity within the United States and around the world, we must seize the chance to make advanced batteries — the heart of this growing industry — right here at home.”
According to BloombergNEF, plug-in vehicle sales are expected to grow from 6.6 million in 2021 to 20.6 million in 2025, the DOE’s blog read. That growing demand for EVs will require EV batteries, it said.
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Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.