The US Department of Energy (DOE) has announced it intends to offer a $2.5 billion loan to Ultium Cells LLC, the battery joint venture between General Motors and LG Energy Solutions.

Expected to close in the coming months, the loan will help the joint venture finance construction of new lithium-ion battery cell manufacturing plants in Ohio, Tennessee and Michigan. The three facilities are expected to create 6,000 good-paying construction jobs and 5,100 operations jobs when they are at full capacity, DOE said in a July 25 press release.

The conditional commitment for the loan to Ultium Cells comes from the US government's Advanced Technology Vehicles Manufacturing (ATVM) program, which last funded a loan in 2010. This will be the Department of Energy's first loan for a battery cell manufacturing project under the vehicle program.

ATVM provides loans to support US manufacturing of light-duty vehicles, qualifying components, and materials that improve fuel economy. The program previously provided loans to Tesla Inc, Ford Motor Company and Nissan Motor Company.

"By manufacturing Li-ion battery cells for EV battery packs in the United States, Ultium Cells will supply GM as it works to deliver its plan to eliminate 100% of tailpipe emissions from its new light-duty vehicles by 2035.  To support the goal of a zero-emissions future, GM plans to install capacity to build one million EVs in North America by the end of 2025. Construction of these three plants also supports GM’s plan to make its global products and operations carbon neutral by 2040."

DOE press release

The cells manufactured by Ultium Cells LLC are large format, pouch-type cells that use a state-of-the-art nickel-cobalt-manganese-aluminum (NCMA) chemistry to deliver more range at less cost. The cells can be arranged in different combinations of flexible modules and battery packs to power every segment on the road today, from performance vehicles to work trucks.

"We have to have vehicle manufacturing capacity but also battery manufacturing capacity. This project provides one of the newest additions to battery manufacturing scale in this country."

Jigar Shah, director of the Department of Energy’s Loan Program Office (LPO), for Reuters

Ultium Cells said in a statement that it is "grateful for the consideration and look forward to working with the Department of Energy on next steps." Several steps remain and certain conditions must be satisfied before Ultium Cells is issued a final loan, the DOE said.

US President Joe Biden has set a target for 50% of US auto sales by 2030 to be made up of electric or plug-in hybrid vehicles. 

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