Tennessee, Kentucky battery plants for Ford electric vehicles on track for $9.2B federal loan

NASHVILLE, Tenn. (AP) — Massive battery plants planned in Tennessee and Kentucky for Ford’s electric vehicles are on track to receive up to a $9.2 billion federal loan in what would be the biggest award under the U.S. Department of Energy’s loan program since President Joe Biden took office.

The money for construction would secure a sizable chunk of funding for Ford’s big electric vehicle swing in the two states.

Ford’s plans include two battery plants in Kentucky and one in Tennessee, each through a joint venture with battery partner SK On, of South Korea. Additionally, there will be a Ford assembly plant in Tennessee able to build up to 500,000 electric pickup trucks a year. The companies are planning an $11.4 billion investment in the projects.

The three battery plants combined are expected to create 5,000 construction jobs, as well as 7,500 operations jobs once the plants are up and running, the Energy Department said in its announcement Wednesday.

The loan would come through the Advanced Technology Vehicles Manufacturing Loan Program. The company — named BlueOval SK under the joint venture — must meet milestones before the deal is finalized.

“We’re thrilled the Department of Energy joins BlueOval SK in our vision to electrify the future of mobility,” Robert Rhee, BlueOval SK’s CEO, said in a statement to media outlets. “BlueOval SK will use this loan to its fullest as we create 7,500 good American jobs, strengthen critical domestic supply chains, and produce high-quality batteries for future Ford and Lincoln electric vehicles here in Tennessee and Kentucky.”

However, the announcement drew sharp criticism from the United Auto Workers union, which called it “a massive $9.2 billion giveaway loan to Ford Motor Co. through the Department of Energy to create 7,500 low-road jobs with no consideration for wages, working conditions, union rights or retirement security.”

The department’s loan office said it “works with all borrowers to create good-paying jobs with strong labor standards during construction, operations, and throughout the life of the loan and to adhere to a strong Community Benefits Plan.”

Ford has said its assembly plant and the battery plant in rural Stanton, Tennessee, will employ about 6,000 people with an investment of roughly $5.6 billion. Ford plans to start production by 2025.

Before landing the Ford project, Tennessee had invested more than $174 million in the unused megasite outside of Memphis where the plants are being built. Tennessee lawmakers have committed to spending nearly $900 million on state incentives, infrastructure upgrades and more as part of a sweeping plan with Ford. The agreement included $500 million in capital grant funds.

Production is also scheduled to start in 2025 at the two battery manufacturing plants being built in Glendale, Kentucky. The venture will employ 5,000 people to produce batteries for future Ford and Lincoln electric vehicles. Ford and its battery partner have invested $5.8 billion in the Kentucky project.

Kentucky’s state incentives package for the project includes a $250 million loan.

The Department of Energy said the federal loan helps support several of Biden’s clean energy goals, including priorities for domestic clean energy and transportation technology manufacturing and a push for electric vehicles to make up at least half of all new cars bought in the U.S. by 2030.

The news of the loan comes about three weeks before the UAW is scheduled to open contract talks with Ford, Stellantis and General Motors.

Newly elected UAW President Shawn Fain has criticized the companies, saying they make billions without fairly compensating workers. Many in the industry expect strikes against one or more of the companies as the union tries to get general and cost-of-living pay raises and eliminate tiers of workers who are paid different wages, sometimes for doing the same work.

At the projects in Tennessee and Kentucky, Ford has stopped short of offering explicit support for union membership at its new plants. The company has said it’s up to workers to decide.

“We have been absolutely clear that the switch to electric engine jobs, battery production and other EV manufacturing cannot become a race to the bottom,” Fain said in a news release about the Ford battery project loan. “Not only is the federal government not using its power to turn the tide – they’re actively funding the race to the bottom with billions in public money.”

The loan also follows the Department of Energy’s recent decision to abruptly reject a $200 million loan for a proposed Kentucky electric vehicle battery facility. The department didn’t offer a reason for the decision, which came after some congressional Republicans argued the company, Texas-based Microvast, has improper ties to China.

Microvast rebutted that claim by saying the Chinese government and Communist Party don’t have any ownership in the company and don’t control or influence its operations.

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Associated Press reporters Tom Krisher in Detroit and Matthew Daly in Washington contributed to this report.