LG Energy Solution·GM Battery Joint Venture Receives $3.2 Trillion Loan Support in the US (Comprehensive)

[Asia Economy reporters Jeong Hyunjin and Choi Seoyoon] LG Energy Solution and Ultium Cells, a battery joint venture with General Motors (GM) in the United States, will receive a loan support of $2.5 billion (approximately 3.26 trillion KRW) from the U.S. government.

On the 12th (local time), according to AP News and others, the U.S. Department of Energy announced that it decided to provide loans to support the costs required for the construction of lithium-ion battery manufacturing facilities in Ohio, Tennessee, and Michigan operated by Ultium Cells.

LG Energy Solution and GM's joint venture 'Ultium Cells' Ohio battery joint factory (Photo by Ultium Cells)

The total borrowing limit is $2.5 billion (approximately 3.3 trillion KRW). The interest rate is at the level of U.S. Treasury yields. The 10-year U.S. Treasury yield is about 3.6% (as of the 9th), which is about 2 percentage points lower considering that AA-rated corporate bonds in the Korean won bond market generally have interest rates of 5-6% for maturities of 2-5 years.

An LG Energy Solution official explained, "To establish stable production capacity in the North American battery market, which is expected to grow the fastest, large-scale investment funding is essential. Especially in the current situation where raising investment funds is very difficult due to recent interest rate hikes and economic recession, securing long-term policy funds at low interest rates has laid the foundation to maintain differentiated growth in the U.S."

The Department of Energy stated that this financial support is the first case of support for a battery manufacturing project under the Advanced Technology Vehicles Manufacturing (ATVM) program. The ATVM program is a loan support program for eco-friendly vehicles, and the Inflation Reduction Act (IRA) created by the Biden administration has additionally allocated $3 billion in funding for this support program.

Ultium Cells plans to use the investment funds to expand production capacity at Plants 1, 2, and 3 located in Ohio, Tennessee, and Michigan, respectively. Last month, Ohio Plant 1 began full-scale mass production, and after Plants 2 and 3 start mass production in 2025, Ultium Cells’ total production capacity is expected to expand to 145 GWh. This amount is enough to produce about 2 million high-performance pure electric vehicles.

The U.S. Department of Energy emphasized that the construction of these manufacturing facilities will create a total of 11,000 jobs.

Jennifer Granholm, Secretary of Energy, stated, "This loan will promote domestic battery production necessary to reduce dependence on other countries, reduce carbon emissions from gasoline vehicles, and support President Biden’s electric vehicle policy goals."

President Biden announced and is actively pursuing the ‘Clean Cars and Trucks Blueprint’ last year, which includes the goal of making half of the cars sold in the U.S. by 2030 electric vehicles.

This content was produced with the assistance of AI translation services.