Ford Receives Record $9.2 Billion DOE Loan to Build Three EV Battery Factories

Posted on June 22, 2023

Ford Motor has been granted the largest loan ever in the history of the Department of Energy's (DOE) Loan Program Office. A massive $9.2 billion will be utilized by the automaker to establish three electric vehicle (EV) battery factories, boosting its domestic production capacity.

This loan marks the most substantial financing since the US auto bailout during the 2009 global financial crisis, as reported by Bloomberg.

The funding will support the construction of three new battery factories as part of Ford's initiative to develop its "BlueOval City", touted as the most advanced and efficient auto complex. Revealed in 2021, the project will see Ford collaborating with SK Innovation.

One of the factories will be situated in West Tennessee alongside an assembly plant in a nearly 6-square-mile site. The other two will be established in the BlueOvalSK Battery Park in Central Kentucky. Together, these factories are expected to yield 129 GWh of battery cells annually, supporting Ford's planned EV production ramp-up.

By 2026, Ford aims to produce around two million EVs per year, a significant leap from the approximately 132,000 vehicles manufactured in 2022. Upon the completion of these factories, various Ford EV models, including a new electric truck currently codenamed "Project T3," will be eligible for billions in incentives via the Inflation Reduction Act (IRA).

The Ford F-150 Lightning currently stands as the only EV model qualifying for the full $7,500 tax credit. Meanwhile, the Mustang Mach-E and E-Transit are eligible for a $3,750 credit.

The $9.2 billion loan aims to enhance EV battery production in the US, establishing a robust domestic supply chain and lessening the country's dependency on China.

BlueOval CEO Robert Rhee emphasized that the loan will aid in creating "7,500 good American jobs." Furthermore, he noted that the IRA is helping US automakers compete on a global scale as the sector transitions toward an entirely electric future. This aligns with the US's ambition to cut greenhouse gas emissions by 50% by 2030.

Since the enactment of the IRA last August, the Loan Programs Office (LPO) lending has reached around $400 billion. Comparatively, General Motors (GM) received $2.5 billion in funding last year, less than a third of Ford's recent loan.

This loan arrives at a crucial point in Ford's EV advancement. After dividing into three businesses to capitalize on individual strengths, the automaker expects its EV unit, Model e, to lose $3 billion this year during the scale-up process. However, Ford anticipates a turnaround by 2026, forecasting an 8% EBIT margin for the Model e division. "The biggest thing of scaling is batteries," Ford CEO Jim Farley stated in a March interview with Bloomberg.