American car makers, including Ford (NYSE:F), General Motors (NYSE:GM), Stellantis (NYSE:STLA), and Tesla (NASDAQ:TSLA), are set to benefit massively from the Biden Administration’s push to promote electric vehicles (EVs). A new funding program from the Energy Department is set to loan out up to $12 billion to car makers to transform their existing plants to manufacture EVs and hybrid vehicles. Energy Secretary Jennifer Granholm broke the news on August 31.
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A total of $10 billion will be shelled out by the Loan Program Office (LPO), and the remaining $2 billion will come from the government’s previously announced Inflation Reduction Act (IRA). The U.S. is concentrating efforts on becoming a global leader in EV manufacturing, where currently, China is the largest player. The Energy Department also plans to give an additional $3.5 billion to domestic companies manufacturing EV batteries.
Challenges for American Automakers
American automakers lag behind their Chinese counterparts, owing to the absence of essential raw materials used in EV batteries. Minerals like lithium, iron, and nickel are widely available in China, putting the mainland at the top position in the global battery supply. Thus, the U.S. is pushing companies to source these materials and manufacture them in the country.
Remarkably, a Ford joint venture has already received $9.2 billion from the department to finance its battery plants in Tennessee and Kentucky. Meanwhile, GM and South Korean partner LG Solutions received a $2.5 billion loan for their Ultium Cells battery plants in the U.S.
American automakers are facing a slew of challenges, with a heated price war among EV manufacturers, labor issues with the United Auto Workers (UAW) union, and supply-chain challenges. Nonetheless, here’s how the major American automakers fare when compared to each other using TipRanks’ stock comparison tool.
