LG Energy, GM venture gets $2.5 bn loan from U.S. Energy Department

LG Energy Solution and General Motors‘ Ultium Cells plant in Ohio, U.S. [Courtesy of LGES]

Ultium Cells LLC, a joint venture between LG Energy Solution and General Motors Co., received a $2.5 billion low-cost loan from the U.S. Energy Department. The lithium-ion manufacturer will use the fund to expand its production facilities in Ohio, Tennessee and Michigan.

The U.S. Energy Department announced on Monday (local time) that it had finalized a low-cost loan of $2.5 billion (3.26 trillion won) to Ultium Cells to help it build manufacturing facilities. The loan is the first financial support provided by the government’s Advanced Technology Vehicles Manufacturing (ATVM) loan program. The Inflation Reduction Act put aside $3 billion to support the program.

Previously, LG Energy Solution and General Motors agreed to build their facilities in Ohio, which would have an annual production capacity of 40 gigawatt hour; Tennessee which will be capable producing 45 GWh a year; and Michigan with an yearly capacity of 50 GWh. Ultium Cells started mass production at the Ohio production base last month and plans to use the secured fund to expand its capacity. It hopes to produce up to 145 GWh, which could be used to build 2 million electric vehicles, after completing the construction of plants in Tennessee and Michigan in 2025.

The three production facilities will likely create 11,000 jobs in the battery manufacturing sector, according to the Energy Department. “Fundraising is essential for stable production in the American market,’’ said an official at LG Energy Solution. “Although the financing condition is not favorable given the high interest rate and the economic slowdown, we successfully prepared a foothold for growth in the fast-growing battery market in the U.S.”

LG Energy Solution shares were down 1.8 percent to 493,000 won as of 2:38 p.m. Tuesday.