Ford's Electric Vehicle Division Secures $9.2 Billion Loan for Battery Plants

The Department of Energy has announced a substantial $9.2 billion loan to Ford's electric vehicle division, BlueOval SK, in a move that highlights the government's commitment to supporting the growth of domestic electric vehicle manufacturing. 

The loan, one of the largest grants given to an automaker in recent history, will primarily be allocated to the construction of three battery manufacturing plants in the United States. This significant investment is expected to bolster Ford's ambitious plan to produce 2 million electric vehicles by 2026.

Loan Details and Implications

The loan, specifically granted to BlueOval SK, a joint venture between Ford and South Korean battery manufacturer SK On, represents the largest payment made to a U.S. automaker since the 2009 financial crisis, as reported by Bloomberg. The allocated funds will be utilized for the development of three manufacturing facilities dedicated to producing batteries for Ford and Lincoln electric vehicles. Notably, these factories are already under construction, with one located in Tennessee and the other two in Kentucky.

Ford's Expanding Commitment to Electric Vehicles

Ford has been ramping up its commitment to electric vehicles, as evidenced by its $20 billion increase in electric vehicle spending last year. The automaker has set an ambitious goal of manufacturing electric vehicles that account for half of its total volume by 2030. In line with this objective, Ford aims to produce 2 million electric vehicles by 2026, a substantial increase compared to the approximately 132,000 electric vehicles it produced in 2022.

The Government's Drive for Domestic Manufacturing

This loan from the Department of Energy aligns with President Biden's broader strategy to enhance domestic manufacturing and bolster the nation's competitiveness in the sustainable technology sector, particularly in the face of increasing competition from China. 

It complements the Inflation Reduction Act, which was passed in August 2022 and allocated a significant $370 billion to support clean-energy projects. Additionally, the act includes consumer tax credits aimed at incentivizing electric vehicle adoption by providing tax rebates of up to $7,500 per vehicle for buyers.

Comparison to Tesla and Ford's Electric Vehicle Success

The government's support for Ford's electric vehicle endeavours comes in the wake of similar assistance extended to Tesla in the past. Notably, Tesla received a $465 million loan from the government in 2010 under the Obama Administration to establish its first factory. 

Ford currently stands as Tesla's closest competitor in the U.S. electric vehicle market, ranking second in electric vehicle sales. Ford's success in this sector has been largely driven by its Mustang Mach-E model, which emerged as the third best-selling electric vehicle in the United States in 2022.

CarBike360 Says

The $9.2 billion loan granted to Ford's electric vehicle division serves as a significant boost to the automaker's ambitions to become a major player in the electric vehicle market. With the construction of three battery manufacturing plants, Ford aims to meet its target of producing 2 million electric vehicles by 2026. 

This loan, coupled with the government's broader focus on domestic manufacturing and clean-energy projects, highlights the administration's commitment to driving sustainable technology adoption and enhancing the country's competitiveness in this crucial industry.