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The US Department of Energy’s (US DOE) Loan Programs Office (LPO) announced a conditional commitment for a loan of up to $9.2bn to BlueOval SK (BOSK) for the construction of three EV battery manufacturing plants. The facilities, one located in Tennessee and two in Kentucky, will enable the production of more than 120 GWh/yr of EV batteries and displace more than 455 million gallons of gasoline per year for the lifetime of the vehicles powered by these batteries. The announcement is one of several recent LPO conditional commitments under the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, aimed at building a strong domestic supply chain for EVs. Recent financings under the program have spanned the critical mineral and battery supply chains and involved mineral processing, battery manufacturing, and battery recycling.
Incentivizing manufacturing and supply chain-focused investments in the US, specifically for components in the renewable energy, storage, and EV segments, is a major priority for President Biden. Manufacturers are eligible for two federal tax credits that support clean energy manufacturing in the US: the Advanced Manufacturing Production Tax Credit (45X MPTC) and the Advanced Energy Project Investment Tax Credit (48C ITC). The 45X MPTC provides tax credits for each clean energy component domestically produced, while the 48C ITC provides a tax credit for purchasing and commissioning property to build an industrial or manufacturing facility. The Inflation Reduction Act (IRA) established the 45X MPTC and expanded the 48C ITC with the aim of reducing dependence on China, which dominates the global supply chains of products like EV batteries and solar panels.
Enerdatics expects the US to witness a historic wave of manufacturing-related investments this year, driven primarily by the demand for solar and EV battery components. Earlier this year, LG Energy Solution stated that it would invest $3.2bn in battery manufacturing facility in Arizona. Recently, India-based battery materials manufacturer Epsilon also announced plans to deploy $650mn in a synthetic graphite anode manufacturing facility, to contribute to the manufacture of 1 million EVs.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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