Stellantis and Samsung Secure $7.54 Billion Loan for EV Battery Plants in Indiana

In a significant development for the electric vehicle (EV) industry, the U.S. Department of Energy (DOE) has preliminarily approved a loan of $7.54 billion to fund the construction of two EV battery manufacturing plants in Kokomo, Indiana. This sizeable investment will benefit StarPlus Energy LLC, a joint venture between automaker Stellantis and battery manufacturer Samsung SDI. The project is projected to generate 3,200 jobs, alongside an additional 2,800 operational roles at the facilities and hundreds of more jobs at a nearby supplier park.

The funding comes from the DOE’s Advanced Technology Vehicles Manufacturing (ATVM) program, an initiative reinstated by President Joe Biden in 2022 aimed at bolstering the U.S. EV manufacturing sector. The conditional loan commitment includes $6.85 billion in principal and $688 million in capitalized interest, injecting critical funds into a sector seeking to aggrandize its capacity amid rising competition.

This investment is part of a broader federal strategy to ramp up domestic EV production, reflecting the increasing emphasis on sustainable transportation solutions in the U.S. Recently, a similar $6.6 billion loan was conditionally approved for electric vehicle manufacturer Rivian, indicating the Biden administration’s commitment to fostering innovation within the automotive industry.

However, time is of the essence; the loan to StarPlus Energy must finalize approval quickly, particularly considering the upcoming political landscape. Former President Donald Trump has indicated intentions to roll back many of President Biden’s investments in EV technology, including potential plans to terminate the $7,500 tax credits for new EV purchases and dismantle funding initiatives consistent with the Inflation Reduction Act (IRA). The ATVM program, which is essential for many EV startups seeking funding, could also potentially be impacted.

The ATVM program gained fame for its role in supporting Tesla’s early production efforts with a $465 million loan in 2009, an act credited with saving the company from facing severe financial difficulties. Under Trump’s administration, however, the program became inactive, leaving many EV startups without the resources they required for expansion and innovation. In 2022, the Biden administration revived the program with a $2.5 billion loan awarded to a joint venture between General Motors and LG Energy Solution and has since made several other commitments, including a considerable $9.2 billion loan to Ford and SK Innovation.

The establishment of the Stellantis-Samsung battery plants marks another vital step forward, with the anticipated production capacity estimated to reach approximately 67 gigawatt-hours (GWh) annually. This output is projected to have the potential to power around 670,000 vehicles once the facilities operate at full capacity.

Despite this positive trajectory, Stellantis is facing its own corporate challenges. CEO Carlos Tavares has announced his impending departure amidst dwindling sales both domestically and globally, raising concerns about the company’s ability to meet the stringent demands of the ATVM program. As Stellantis navigates these tumultuous waters, it must accelerate efforts to catch up with competitors aggressively transitioning to electric vehicles and software-defined platforms.

As the EV landscape evolves, the collaboration between Stellantis and Samsung illustrates the increasing importance of partnerships in addressing the growing demand for battery production amid the unprecedented shift towards electrification in the automotive sector. With significant investments and job creation on the line, the future may hold further strategic moves as the industry adapts to new market realities.