Ford's EV plants get record US$9 billion in subsidized government loans
Ford's biggest ever one-time investment by a US automaker - the BlueOval EV battery joint venture with SK On - will receive a generous push by the US government. Ford has managed to secure a record US$9.2 billion financing for the three EV battery factories - in Kentucky and Tennessee - that it will be building together with Korea's SK On. For now, Ford is treating its dedicated Model E electric vehicles department as a startup, subsidizing its operations from its gas-powered car business. The road to profitability is to produce EVs at scale, and the government's loan that comes at much lower interest rate than commercial ones, will spearhead the process.
The money still comes courtesy of the White House's Inflation Reduction Act that brought the new EV tax credits, but is structured via the US Department of Energy’s Loan Programs Office whose funding is meant for green infrastructure projects. The loan to Ford is the largest in the program's two decades of existence that also saw some of its investments fall flat, like the infamous Solyndra bankruptcy.
Ford has pledged $7 billion for the BlueOval venture, while SK On is supposed to add another $4.4 billion and pull production plans forward. Due to Ford's massive portfolio electrification push, the expected launch timeframe of the carmaker's battery factories has apparently been sped up significantly. Last year, Ford announced that it will invest up to US$20 billion more on top of its US$30 billion EV commitment by 2030.
Ford wants to have a production capacity for 600,000 electric vehicles by 2023 and gradually become the "true EV leader" in the U.S., surpassing Tesla. These plans can only mean an insatiable demand for EV batteries, so Ford has reportedly worked with SK On, the battery subsidiary of SK Innovation, to start production in their joint battery factories in the U.S. months ahead of schedule. The Ford-SK partnership over battery development and manufacturing has already secured the Kentucky battery plant (BOSK1) equipment.
The second Ford battery factory, in Tennessee, is denoted as BOSK2, and BlueOval SK has similar plans for its production lines launch. The battery making equipment order is fulfilled and will be installed this year, "with commercial production beginning in 2024." Ford's Kentucky and Tennessee battery factories are expected to have 17 production lines and be able to churn out 43 GWh each in battery capacity annually. This should tide Ford over for the initial stage of its vehicle roster electrification plans but a third battery factory, known internally as BOSK3, will be started as soon as the Kentucky and Tennessee plants are fully operational, too. Ford's EV batteries that will be produced on American soil are said to be both long-axis (600mm) units, as well as the more orthodox 300mm ones.
With the government's record $9 billion financial injection, Ford now has every chance to become one of the leading EV battery manufacturers in the US. The move will also mean that its electric cars will be eligible for the full $7,500 federal tax credit, too, in a race against Tesla that also has grand battery production expansion plans and even plans to put into operation its own lithium refinery on the Gulf Coast next year.