The Biden administration will provide automakers with funding worth $15 billion to retrofit legacy car manufacturing factories into electric vehicle and EV battery-production facilities. A recent announcement from the U.S. Department of Energy (DOE) revealed that the administration would issue $15.5 billion in loans and funding for the “retooling of existing factories” to aid in the transition to electric cars.
Furthermore, the move will provide much-needed capital for established automakers as their key products (internal combustion engine cars) become obsolete in an increasingly electric market. The funding may keep thousands of people in the automotive sector employed as the industry moves to electricity. Electric cars are a core pillar of America’s transition from fossil fuels to clean energy.
Transportation is responsible for more than one-third of emissions, making the sector one of the most prolific polluters in the country. The United STates and other nations have pledged to replace their ICE vehicle fleets with battery electric vehicles (BEVs) to reduce greenhouse gas emissions and cut their reliance on fossil fuels.
However, this transition to electric cars will likely have dire consequences for companies in the automotive industry by decimating demand for their core products and significantly impacting their bottom lines. Legacy automakers have struggled to remain profitable in recent years as electric vehicles gain more popularity and EV adoption increases. As electric vehicles become more affordable, increased competition from electric vehicle companies will eat even further into established automakers’ bottom lines.
The recent DOE announcement presents an opportunity to inject funds into the struggling automotive industry while upholding America’s electrification goals. These funds will include loans worth $10 billion and $2 billion in grants to support the conversion of automotive manufacturing facilities into EV production centers while retaining “high-quality jobs for local communities.”
According to a Notice of Intent from the Department of Energy, the funding will also provide $3.5 billion to support the domestic manufacture of batteries for BEVs and stationary storage solutions to support America’s grid. Transitioning to clean energy from solar and wind will call for significant investment into efficient and energy-dense battery technologies to store renewable energy produced during peak production hours before releasing it into the grid during peak consumption hours.
With the U.S. heavily reliant on Chinese companies and technology for key battery raw materials, the Biden administration is keen on expanding local battery production to cut its reliance on China. U.S. Secretary of Energy Jennifer M. Granholm said that President Joseph Biden is investing in the factories and workforce that initially made the U.S. a worldwide powerhouse in the manufacturing sector. Companies interested in applying for loans or grants from the program can apply through the DOE Office of Manufacturing and Energy Supply Chains (MESC) or its Loan Program Office.
In the meantime, entities such as Kandi Technologies Group Inc. (NASDAQ: KNDI) are doing the best they can to bring to market affordable EVs so that as many motorists around the world as possible can make the switch from ICE cars.
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