The U.S. Department of Energy (DOE), through its Loan Programs Office, announced Monday a $2.5 billion loan to Ultium Cells to help finance the construction and production of lithium-ion battery cell manufacturing facilities in Lordstown; Spring Hill, Tennessee; and Lansing, Michigan.

21 News spoke with an auto industry analyst and a DOE Chief of Staff to see how this loan will potentially help the Valley and the electric vehicle (EV) industry as well.

The Lordstown Ultium Cells battery facility, a joint venture between General Motors and LG Energy Solution, will manage battery cell production at the three facilities to address the growing U.S. consumer demand for electric vehicles.

Sam Abuelsamid, a principal analyst leading on electric vehicles with Guidehouse Insights, consulting experts and marketing consults firm, looking at advanced technology adoption, said the loan was coming from the Advanced Technologies Vehicle Manufacturing (ATVM) program which was created in 2008, with a goal to provide funding for existing factories or new factories for clean energy, particularly electric vehicles.

"This is going to help fund the construction and initial operation of three lithium-ion battery plants ... to produce batteries for General Motors EVs over the next several years," Abuelsamid said.

Jeremiah Baumann, Chief of Staff, Office of the Under Secretary for Infrastructure at the US Department of Energy, said the goal is to rebuild manufacturing jobs in the US, with the added benefits of lower costs for maintenance of fueling of EVs. "It's a win-win for the people of Ohio getting some really good jobs out of it," Baumann added.

Abuelsamid said that the loan through the ATVM program helps businesses like this receive investment capital on more favorable terms than through traditional lending services.

Abuelsamid said that the equipment needed for the production of lithium-ion batteries is very expensive, stating that each plant will cost the GM/LG joint venture between $2 billion to $4 billion range per location, depending on plant size and capacity. The $2.3 billion facility in Lordstown began battery production in August.

While Abuelsamid said that this news may not mean as much for the Lordstown facility seeing that it is up and running, however, added that it provides security that the joint venture will be sustainable for the jobs here in the Valley, including expansion of the existing facility and the additional new jobs that would come with that or potentially more battery plants looking to come to the Valley, especially with Foxconn building EVs here as well.

With Foxconn's recent announcement of building vehicles for Fisker Motors beginning in 2024, Abuelsamid said Foxconn has not announced sourcing for the batteries for the vehicles, that another facility built in the region is not out of the possibility.

Abuelsamid said that a fourth battery facility location will be announced by GM/LG in early 2023, with an estimated investment of $12 billion to be able to build batteries for more than 1 million electric vehicles per year.

"In 2020, there was roughly somewhere in the order of  40 gigawatt-hours a year of battery production capacity... and right now the list is currently over 600 gigawatt-hours of capacity, so you are looking at about 15 times the capacity should be online by 2026," Abuelsamid added. "600 gigawatt-hours should be enough for about 6 million EVs annually."

The project is expected to create 6,000 construction jobs and 5,100 hourly jobs at the three facilities, including more than 700 United Auto Worker jobs in the newly organized Lordstown plant.

Baumann said that 11,000 jobs - construction and plant workers - would be created across the three locations, which includes 1,500 ongoing jobs at the Lordstown Ultium Cells facility. "This is a huge growth space for the global economy, so it means a lot that we are getting in on the front end of it,' Baumann added.

Brooke Waid, Communications for Ultium Cell told 21 News that the Lordstown facility currently has more than 1,000 employees, and will grow to more than 1,500 once fully operational in late 2023.

Abuelsamid said the commitment by Ultium Cells is that the EV industry is racing to produce enough batteries to convert the auto industry from the stand combustion engine standard and to begin to reduce emissions from the vehicles.
 
Baumann said that reduced emissions from EVs combined with cleaner, more efficient energy sources like wind and solar, help to reduce energy costs going forward as well.
 

Abuelsamid estimates that the battery production investment with other vehicle manufacturers that have already been announced to exceed $100 billion in total.

Currently, the biggest manufacturer of lithium-ion for EV batteries is in China, CATL and BYD, as well as LG, SK and Samsung in South Korea. Many of the US EV manufacturers are partnering with companies in South Korea, Abuelsamid said.

Baumann said the announcement of the funding for the lithium-ion battery plants will help to keep the US less dependent on Asian battery manufacturers.

With batteries' size, weight and cost, most manufacturers are looking to build the batteries locally, and to also get the raw materials needed for the batteries locally as well. One-third of the price of an EV is in the cost of the batteries, Abuelsamid said.

The Biden Administration has stated that it wants half of all passenger vehicle sales to be EVs by 2030.

Abuelsamid said the goal by the mid-2030s is to be able to build around 11-12 million EVs per year, which would require a total of 1.2 to 1.3 terawatt-hours per year for all lithium-ion facilities in the US, about double what has currently been announced.

The ATVM program was idled from 2012 until 2022, until the Biden administration restaffed it in 2021 and started taking loans again, and this is one of the first major loans of the revived program Abuelsamid said and said he expects additional loans to be announced in the next year or so.

Baumann said that the Biden administration and all 50 states have submitted plans to the Department of Energy and the Department of Transportation to build 500,000 charging stations along highways and in towns and cities across the US, but noted that most EV owners charge their cars at home or at work.

Baumann added that an additional $3 billion in funding to come supporting EV component manufacturing, along with additional loans to be announced.