GM and LG get $2.5 billion battery loan from the Department of Energy
Enlarge / GM's Ultium batteries are modular. The largest packs are found in the Hummer EV, which carries a hefty 200 kWh. (credit: GMC)
The US Department of Energy announced a big boost to domestic electric vehicle battery production on Monday. It's loaning $2.5 billion to a company called Ultium Cells, a joint venture between General Motors and LG Energy Solution that will build batteries for the automaker's new range of EVs. The funds will help with the construction of three new battery plants in the US—in Lansing, Michigan; Lordstown, Ohio; and Spring Hill, Tennessee—as part of GM's plan to build 1 million EVs a year by 2025.
US battery production is set for massive growth in the coming years. First, the pandemic disrupted shipping, exposing the fragility of global just-in-time supply lines. Then, the Inflation Reduction Act of 2022 tied an EV's potential tax credit to the domestic content of that EV's battery pack, in terms of raw materials and final assembly. Each year, an escalating proportion of the battery must be domestic in order to qualify for the credits of up to $7,500.
However, it's unlikely that the automakers or their battery suppliers were taken by surprise. Linking EV incentives to local manufacturing was proposed in 2021 by a group of lawmakers in a more ambitious infrastructure bill that would have added an extra credit for vehicles made by unionized workers. (That bill did not survive contact with Senator Joe Manchin.)