The US is reviving the green energy loan program that helped put Tesla on the map

The Department of Energy’s Advanced Technology Vehicle Manufacturing Program, which famously helped put Tesla on the map, is set to provide its first loan in more than a decade. The company confirmed that the ministry will announce a $2.5 billion loan for a joint venture between General Motors and LG Energy Solutions to help finance the construction of a new lithium-ion battery manufacturing facility. (The news was first reported by Reuters.)

The Advanced Technological Vehicle Manufacturing Program, or ATVM, has achieved near-legendary status in the electric-vehicle startup world thanks to a timely $465 million loan to Tesla, which is credited with helping save the company from premature death. Since then, a number of cash-strapped start-up electric car companies have asked for loans but to no avail; The program has been essentially inactive since 2010.

Created by Congress under the administration of former President George W. Bush, the ATVM program has committed $25 billion to “provide low-cost capital for fuel-efficient vehicles and qualified component manufacturing in the United States.”

Other recipients include Ford and Nissan, both of which received much larger grants from Tesla. Ford got $5.9 billion to refurbish plants across the country and improve the energy efficiency of its cars, and Nissan got $1.45 billion to support production of its Leaf electric car. (Both Tesla and Nissan paid off their loans.)

Not all recipients do this either. Like Tesla, Fisker Automotive was once a promising producer of luxury electric vehicles. In 2010, the Department of Energy awarded it $529 million, but funding was frozen in 2011 after it failed to deliver. The company has since filed for bankruptcy, was later purchased by a Chinese auto parts supplier, and relaunched as Karma.

Notably, the ATVM program went dark at the same time that Republicans stepped up their criticism of former President Barack Obama and his administration for its handling of another Department of Energy loan to Solyndra, a clean energy company that subsequently 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 says he now plans to vote for Republican candidates in the upcoming election.

But in the years since, Democrats have lost their fears of 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 paid out in loans to electric vehicle charging companies (including Tesla). And while much of Biden’s climate agenda remains stalled in Congress, reviving the ATVM program is a pot of money still available to the administration to fund some of its priorities.

Unsurprisingly, the GM is the beneficiary. Biden has taken an interest in the automaker, praising its plans to expand its manufacturing footprint and even test drive a GMC Hummer EV. (Biden concluded that General Motors had formed the joint venture Ultium Cells with South Korea’s LG Energy Solution with the goal of building new facilities in Ohio, Tennessee and Michigan.

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

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

Leave a Reply

%d bloggers like this: