The US Department of Energy (DOE) said on Thursday it intends to loan up to $9.2 billion to a joint venture between Ford and SK On for the construction of three manufacturing plants to produce batteries for Ford Motor Company’s future Ford and Lincoln electric vehicles.
BlueOval SK, joint venture between Ford and SK, is expected to sign the formal loan agreement as early as before the year-end. If the process is finalized, the funding will come from the DOE’s Advanced Technology Vehicle Manufacturing (ATVM) program authorized by the Energy Independence and Security Act of 2007. The program provides loans for projects related to fuel-efficient vehicles or eligible component manufacturing in the United States.
For the AVTM loan, the U.S. Treasury rate will be applied for the interest rate. This means once the DOE issues the final loan, BlueOval SK will be able to get the loan with a low interest rate equivalent to 10-year Treasury yield.
The DOE conducts rigorous due diligence, including and technical, market, financial, credit, legal, and regulatory reviews, to assess whether the project is eligible for the ATVM loan program.
While recognizing BlueOval SK’s battery production, which would be based on SK On’s battery solutions, the DOE said it expects the project to help building a domestic supply chain at a time U.S. ramping up electrification efforts in the auto market.
Ford and SK announced in 2021 they would invest $11.4 billion to build a F-150 electric vehicle assembly plant and three battery plants in the United States with Ford investing $7 billion.
BlueOval SK, which was officially launched last July, will use the funds from the ATVM loan program for the construction of three battery plants – one in Tennessee and two in Kentucky. Once they become operational from 2025, the three plants are projected to have combined production capacity of more than 120 gigawatt hours (GWh), which is enough to power about 1.2 million electric vehicles annually.
This is the sixth loan for battery supply chain projects from the ATVM program.
