U.S. Preps $2.5 Billion for GM Electric Vehicle Battery Venture With LG
With the United States having successfully passed the Inflation Reduction Act over the summer, the financial floodgates have been opened for battery suppliers. Despite often being framed as a massive infrastructure package that would also help tamp down U.S. inflation, the bill also included numerous items from the Biden administration’s climate agenda setting aside billions for industries vowing to go green. This includes the joint venture between General Motors and LG Energy Solution – which will receive $2.5 billion in loans to build three new lithium-ion battery factories.
The cash comes from the Advanced Technology Vehicles Manufacturing (ATVM) loan program and offers favorable terms for Ultium Cells LLC and will help finance the construction of manufacturing plants in Ohio, Michigan, and Tennessee.
According to Reuters, U.S. Energy Secretary Jennifer Granholm will be spending most of Monday proclaiming the loans as a victory in Michigan while meeting with Labor Department Deputy Secretary Julie Su, Michigan Governor Gretchen Whitmer, United Auto Workers (UAW) President Ray Curry, and other officials, automakers and EV battery companies. The group will also reportedly “discuss strategies to recruit and retain a diverse and skilled battery workforce, and the Biden administration's Battery Workforce Initiative.”
The government would like to increase battery production stateside due to how much of the industry is localized to Central Asia. However, due to the Biden administration wanting 50 percent of all U.S. auto production to be electric or plug-in electric hybrid vehicles by 2030 (with gas and diesel cars to be phased out by 2035), leadership believes it can incentivize the industry into building within the U.S. by waving enough cash under the right noses.
But there’s also a stick to accompany the government’s financial carrot. With the EV tax credit system having been rejiggered under the so-called Inflation Reduction Act of 2022, funding is now tied to the domestic content of the EVs battery pack. This encompasses both the materials going into the unit as well as where final assembly takes place and the necessary percentage escalates each year. This means automakers vying to sell EVs in the United States will need to bring manufacturing there in order for their vehicles to qualify for credits of up to $7,500.
Considering the number of domestic partnerships we’ve seen formed between automakers and companies like SK Innovation and LG recently, it seems as though the plan is working. Though a lot of those deals were completed a year before the Inflation Reduction Act was passed, making it hard to know how much credit to give the plan unless your job is to cheerlead for it.
“It is flooring the accelerator to build the electric vehicle supply chain here at home – and that starts with domestic battery manufacturing led by American workers and the unions that support them,” stated Granholm. “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.”
GM and LG Energy are reportedly considering a fourth U.S. battery plant for Indiana. Though, even without it, the three-plant deal is supposed to yield roughly 6,000 temporary construction jobs and another 5,100 factory positions. As of Monday, Ultium Cells LLC said that the $2.6-billion dollar facility in Michigan should open in 2024 – adding investments for the $2.3-billion battery facility in Tennessee would be increased by an additional $275 million.
If you’re a fierce advocate for electric vehicles, then you’re probably already dancing in the streets. However, those skeptical of any state-backed push for electrification or unfettered government spending are likely to be far less enthusiastic.
[Image: General Motors]
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- Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
- Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
- William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
- Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
- Marvin Im a current owner of a 2012 Golf R 2 Door with 5 grand on the odometer . Fun car to drive ! It's my summer cruiser. 2006 GLI with 33,000 . The R can be money pit if service by the dealership. For both cars I deal with Foreign car specialist , non union shop but they know their stuff !!! From what I gather the newer R's 22,23' too many electronic controls on the screen, plus the 12 is the last of the of the trouble free ones and fun to drive no on screen electronics Maze !
"Don't want to run my home appliances on gasoline or diesel because of carbon monoxide."
Who has *EVER* advocated for that?
EBFlex--You lack any character except that of a jest.