The U.S. Department of Energy’s Loan Programs Office is locking in billion-dollar federal investments aimed at building out a domestic battery supply chain that could accelerate the rollout of new electric vehicle models by major automakers.

On Dec. 16, LPO announced it had finalized a $9.63 billion loan to BlueOval SK, a joint venture between Ford Motor Co. and South Korean battery maker SK On. The company is building three mammoth battery factories, two in Kentucky and one in Tennessee, which eventually will produce more than 120 GWh of batteries per year, to be used in Ford and Lincoln EV models.

The second finalized loan, announced Dec. 17 for $7.54 billion, is going to StarPlus Energy, a joint venture of Stellantis and Samsung. StarPlus is nearing completion of the first of two EV battery factories in Kokomo, Ind., with a total annual battery capacity of 67 GWh, or the equivalent of about 670,000 EVs.

BlueOval also has two of its three factories getting ready for production in 2025, one each in Kentucky and Tennessee. While the company says construction of the second Kentucky plant is “on schedule,” work on the project was put on hold in 2023 after Ford pulled back on its planned rollout of EVs because of lower-than-expected demand.

The BlueOval and StarPlus loans are, respectively, the largest and second largest that LPO has made under its Advanced Technology Vehicles Manufacturing program, which is designed to “provide low-cost debt capital for fuel-efficient vehicle and eligible component manufacturing in the United States,” according to an LPO fact sheet.

In December 2022, LPO also closed a $2.5 billion loan to Ultium Cells, the battery joint venture of General Motors and LG Energy Solutions, again to fund battery factories in Michigan, Ohio and Tennessee.

In BlueOval’s case, the loan will help the company “do more, faster, increasing liquidity and optimizing financial flexibility,” CFO Jiem Cranney said in an email to NetZero Insider.

“We have invested more than $11 billion in the construction of three 4 million square-foot facilities, installation of equipment and strategically building our workforce,” Cranney said. “This loan, which will be repaid with interest, keeps us on pace for an on-schedule start to production and allows BlueOval SK to sustain and grow our presence in the EV battery space.”

Building out a domestic EV battery supply chain is seen as increasingly important for the U.S. to successfully compete against China, which controls 70 to 90% of different parts of global battery supply chains, according to a recent analysis from the Carnegie Endowment for International Peace. Chinese EVs are also gaining ground in Southeast Asia and Mexico, with smaller, less expensive models, in some cases priced under $20,000.

While U.S. tariffs will keep Chinese EVs out of the domestic market at least in the near term, the loans are “essential to getting [EV manufacturers] to choose the United States of America,” LPO Director Jigar Shah told Reuters. “When you look at the competition that we have from China, it is very clear to me that they have used low-cost debt for a very long time to promote a lot of manufacturing capacity that has hollowed out many communities in Kentucky, Tennessee and other states around the country.”

US Market

A robust domestic battery supply chain is also seen as critical for raising the confidence of both automakers and consumers in a strong U.S. market for electric vehicles. Despite their large investments in battery factories, both Ford and Stellantis have been cautious, if not slow, to expand their EV offerings.

Ford continued its EV pullback in August, announcing a shift in its sales strategy to focus on the commercial vehicle market and the production of hybrid vehicles, which have seen rising sales across the auto industry. Although Ford’s Mustang Mach-E has led the U.S. market for crossover electric SUVs this year, sales of the popular model fell 10% in the third quarter, according to Ford Authority, an industry trade publication.

Tesla still leads the new EV market in the U.S., with 49.5% of sales, but Ford is second, with 6.8%, according to Cox Automotive.

Stellantis, which owns the Jeep, Chrysler and Dodge brands, only recently launched its first EV for the U.S. market, the Jeep Wagoneer S. It has also announced plans to start production in early 2025 of its new electric Dodge Charger, which the company is billing as the “the world’s first and only electric muscle car.”

Stellantis grabbed additional headlines in early December with the announcement that it is partnering with Houston-based Zeta Energy to develop lithium-sulfur batteries, which could provide greater range and faster charging times, according to the Stellantis press release.

Neither Stellantis nor StarPlus responded to NetZero Insider queries about their plans for the Kokomo factories and whether they would be used to produce lithium-sulfur batteries.

EV Chargers Plugging Along

While much uncertainty surrounds the fate of federal funding for EVs during the second Trump administration, the U.S. market continues to rack up increasing sales and steady growth.

In 2024, EVs accounted for about 8% of all new auto sales in the U.S., according to year-end figures from Cox. Fourth-quarter sales of 356,000 EVs represent an estimated increase of 12% year over year.

New EV sales for 2024 are expected to hit 1.3 million, said Stephanie Valdez Streaty, the company’s director of industry insights.

Cox is predicting that EVs will “tip over 10%” of the new car market in 2025, with “the introduction of new models, improved charging and advancements in battery technology,” Valdez Streaty said during a Dec. 17 webinar. Expanding the charging network will remain critical to overcoming consumers’ charging anxiety, which could be threatened if the funding for the National Electric Vehicle Infrastructure program is “redirected or eliminated,” she said.

The NEVI program, funded with $5 billion from the Infrastructure Investment and Jobs Act, provides formula-based allocations, typically in the millions, to states to install direct current fast chargers every 50 miles along “fueling corridors,” which typically follow interstate and state highways. To date, 171 NEVI chargers are online at 41 stations across 12 states, according to the latest figures from the Joint Office of Energy and Transportation.

The U.S. now has more than 205,000 public chargers, so EV drivers on 60% of the country’s most heavily trafficked highways can expect to find a public charger every 50 miles, the office says.