US resurrects green power loan program that helped put Tesla on the map

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The Department of Energy’s advanced technology vehicle manufacturing program, which helped put Tesla on the map, is about to issue its first loan in more than a decade. The department will announce a $2.5 billion loan to a joint venture of General Motors and LG Energy Solution to help fund construction of a new lithium-ion battery manufacturing plant, the company confirmed. (The news was first reported by Reuters.)

The Advanced Technology Vehicle Manufacturing, or ATVM, program has achieved near-mythical status in the world of electric vehicle startups thanks to its timely $465 million loan to Tesla, which is credited with helping save the company to an untimely death. Since then, a number of cash-strapped electric vehicle startups have also applied for loans, but to no avail; the program has been virtually inactive since 2010.

The ATVM program was created by Congress during the administration of former President George W. Bush, allocating $25 billion “to provide low-cost loan capital for the manufacture of fuel-efficient vehicles and components eligible in the United States”.

Other recipients include Ford and Nissan, both of which received much larger grants than Tesla. Ford got $5.9 billion to retrofit factories across the country and improve the fuel efficiency of its vehicles, and Nissan got $1.45 billion to support production of its Leaf electric car. (Tesla and Nissan have both repaid their loans.)

Not all recipients fare equally well. Like Tesla, Fisker Automotive was once an up-and-coming producer of luxury electric cars. In 2010, the Department of Energy awarded it $529 million, but funding was frozen in 2011 after it failed to meet milestones. The company has since filed for bankruptcy, was later acquired by a Chinese auto parts supplier and relaunched as Karma.

Notably, the ATVM program died out around the same time Republicans escalated their criticism of former President Barack Obama and his administration for its handling of another Department of Education loan. Energy to Solyndra, a clean energy company that later went bankrupt. Ironically, Tesla was once derided as a “loser” by then-presidential candidate Mitt Romney, who compared the company to Solyndra. Tesla CEO Elon Musk said he plans to vote for Republican candidates in the next election.

But in the years since, Democrats have lost their trepidation about giving government-backed loans to clean energy companies. President Joe Biden has secured $5 billion for electric vehicle charging as part of his bipartisan infrastructure plan, much of which will be disbursed in the form of loans to electric vehicle charging companies (including Tesla). And while much of Biden’s climate agenda remains stalled in Congress, resurrecting the ATVM program is money that’s still available to the administration to fund some of its priorities.

Unsurprisingly, GM is the recipient. Biden paid particular attention to the automaker, praising its plans to expand its manufacturing footprint and even test drive the GMC Hummer EV. (“A hell of a vehicle,” Biden concluded.) GM formed the Ultium Cells joint venture with LG Energy Solution of South Korea to build new facilities in Ohio, Tennessee and Michigan.

“These facilities will create more than 5,000 new high-tech jobs in the United States,” an Ultium Cells spokesperson said in a statement. “We appreciate your consideration and look forward to working with the Department of Energy on next steps.”

“[Loan Program Office’s] The conditional commitment to Ultium Cells is the latest evidence of the Department’s ongoing efforts to help build a national supply chain to meet the growing demand for electric vehicles,” said Jigar Shah, director of the Office of Lending Programs at the DOE, in a statement. “These new manufacturing facilities will create thousands of well-paying jobs in three states while improving existing lithium-ion battery technologies.”

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