The US Energy Department is set to announce on Monday that it will loan $2.5 billion to a joint venture between General Motors and LG Energy Solution, according to a report from Reuters. The loan will reportedly assist in financing the construction of new lithium-ion battery cell manufacturing factories in Ohio, Tennessee and Michigan.
The deal is expected to close in the coming months, and comes from the government’s Advanced Technology Vehicles Manufacturing loan program. This would be the Energy Department’s first loan for battery cell manufacturing facilities under this program.
The Advanced Technology Vehicles Manufacturing has not funded a new loan since 2010, but has previously provided, and .
“We have to have vehicle manufacturing capacity but also battery manufacturing capacity,” Jigar Shah, who directs the Energy Department loan program office, said in a statement to Reuters. “This project provides one of the newest additions to battery manufacturing scale in this country.”
The investment in lithium-ion battery manufacturing stems from a global push to create more sustainable transportation, including electric or hybrid vehicles. The Biden administration outlined a target to make half of all US auto production electric or plug-in electric hybrid by 2030.
The US Department of Energy didn’t immediately respond to a request for comment.