Ford, in collaboration with its South Korean battery manufacturing partner SK On, has agreed to obtain a loan of $9.2bn from the US Department of Energy, CNN reports. This significant financial backing aligns with President Joe Biden's initiative to accelerate electric vehicle (EV) production within the United States.
The loan will be utilized by Ford and SK's joint venture, BlueOval SK, to construct three electric vehicle battery plants. These manufacturing facilities are planned to be located in Kentucky and Tennessee, with two plants situated in the former and one in the latter.
In 2021, Ford initially announced its intentions to establish EV and battery factories in the two states. The joint venture had projected an investment totaling $11.4bn for this endeavor, which would stand as Ford's largest single manufacturing investment since the company's inception in 1903. In addition to the three battery plants, the sites will include a factory dedicated to producing electric trucks.
The loan agreement is conditional, meaning Ford must meet certain requirements before accessing the funds. The specific conditions have not been disclosed by either Ford or the Department of Energy. Additionally, although the loan amount is $9.2bn, Ford may utilize less than the full sum.
The Department of Energy affirms that the loan funds will create 5,000 construction jobs in Kentucky and Tennessee, ultimately resulting in approximately 7,500 permanent positions across the three plants. The loan falls under the purview of the DoE's Advanced Technology Vehicles Manufacturing Loan Program, a $25bn initiative designed to diminish US reliance on oil and reduce carbon emissions.
If fully utilized, the Ford loan would surpass the total amount of $8bn lent through the program since its authorization in 2007. Notably, Ford had previously obtained a $5.9bn loan through the program in 2009, which was fully repaid as of last year. General Motors also secured a $2.5bn loan under the program in the previous year.
This loan agreement aligns with President Biden's objective of achieving 50% of new vehicle sales to be electric by the year 2030, as the administration aims to promote the widespread adoption of EVs in the United States.
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