U.S. Energy Department Finalizes $9.63 Billion Loan for Ford and SK On

By David Shepardson
WASHINGTON (Reuters) – On Monday, the U.S. Energy Department announced it has finalized a $9.63 billion loan to a joint venture of Ford Motor (NYSE:F) and South Korean battery maker SK On. This funding will finance the construction of three new battery manufacturing plants located in Tennessee and Kentucky.

This low-cost government loan for the BlueOval SK joint venture marks the largest ever from the government’s Advanced Technology Vehicles Manufacturing loan program. SK On, part of energy group SK Innovation (KS:096770), is pivotal in this initiative.

The finalized award, first reported by Reuters, is among several efforts by the Biden administration aimed at boosting electric vehicle production before President-elect Donald Trump takes office next month. The loan amount exceeds the prior $9.2 billion conditional commitment announced in June 2023 for the BlueOval project, as Trump and his advisers have been critical of the administration's EV production incentives.

Jigar Shah, head of the DOE Loan Programs office, stated, "This program is essential to getting people to choose the United States of America." He emphasized the competition from China and how low-cost debt has undermined American manufacturing communities in states like Kentucky and Tennessee.

The joint venture will build battery manufacturing facilities that will enable the production of over 120 gigawatt hours of U.S. battery capacity annually. BlueOval SK has invested more than $11 billion thus far in constructing three facilities, each spanning 4 million square feet. Their first Kentucky plant is expected to start production in 2025, with the Tennessee plant set to follow in late 2025.

The lengthy 18-month loan process was attributed to the DOE’s thorough due diligence, which included technical, market, financial, credit, legal, and regulatory evaluations.

Earlier this month, the DOE also announced plans to loan up to $7.54 billion to StarPlus Energy, the joint venture between Stellantis (NYSE:STLA) and Samsung SDI (KS:006400), for constructing two EV lithium-ion battery plants in Indiana. This commitment is pending finalization, encompassing $6.85 billion in principal and $688 million in capitalized interest.

Additionally, the DOE proposed a loan of up to $6.6 billion to Rivian (NASDAQ:RIVN) to establish a plant in Georgia for producing smaller, more affordable EVs by 2028. In December 2022, they finalized a $2.5 billion loan to a joint venture of General Motors (NYSE:GM) and LG Energy Solution, aimed at funding three new lithium-ion battery cell manufacturing facilities in Ohio, Tennessee, and Michigan.