The US government will lend Ford and joint venture parter battery maker SK On $US9.2 billion to help finance the construction of three new battery manufacturing plants, helping it to close the gap with market leader Tesla.
The loan, from the Department of Energy, will fund new plants in the USÂ Â and also help the US close the gap on booming Chinese EV production.
The low-cost government loan comes from the government’s Advanced Technology Vehicles Manufacturing (ATVM) loan program, which Bloomberg says has gone largely unnoticed.
“In the grand scheme of things, the $7.5 billion earmarked for EV buyer credits under the IRA is a drop in the bucket. At a nominal $7,500 per vehicle, in theory it covers only around one million new EVs,” says Bloomberg.
“That isn’t much when your administration wants to turn half of the roughly 15-million strong new vehicle market electric by 2030. More important is turning over the fixed asset base of the domestic autos industry: Once the factories only make EVs, those are what will be available to buy.
“Hence, the $9.2 billion loan to Ford’s joint-venture BlueOval SK is more important than consumer credits in terms of forcing through a structural change in the industry.”
Bloomberg says Ford is attempting a highly risky strategy of building a new EV business that competes with its traditional ICE business. It also needs to scale quickly if it has any chance of success.
Bloomberg says that unlike Musk and Tesla, Ford can’t count on endlessly patient investors to pull this off. It needs a patient, deep pocked venture capitalised help it scale. The US government is the perfect financier.
Daniel Bleakley is a clean technology researcher and advocate with a background in engineering and business. He has a strong interest in electric vehicles, renewable energy, manufacturing and public policy.