This file photo, provided by LG Energy Solution Ltd. on May 14, 2021, shows the construction site for a battery cell manufacturing facility of Ultium Cells LLC, the joint venture with U.S. General Motors Co., in Ohio.
SEOUL, Dec. 13 (Korea Bizwire) — LG Energy Solution Ltd. said Tuesday its joint venture with U.S. General Motors Co. has secured US$2.5 billion through a loan program approved by the U.S. government, funding that will help finance the construction of three electric vehicle battery plants in America.
The U.S. Department of Energy (DOE) finalized the loan for Ultium Cells LLC on Monday (U.S. time) under a low-rate Loan Programs Office (LPO) to fund the company’s new lithium-ion battery cell manufacturing facilities in Ohio, Tennessee and Michigan, the South Korean battery maker said.
The interest rate is about 2 percentage points lower than what a company would expect from the domestic bond market, LGES said.
The yield on 10-year U.S. Treasurys had stood at around 3.6 percent as of Friday, compared with the AA-grade corporate bonds in the Korean won-denominated bond market with a current interest rate of about 5-6 percent.
“Large-scale financing is essential to securing a stable production capacity in the North American market, showing huge growth potential,” an LGES official said.
“We have managed to secure the footing to continue the differentiated growth in the United States with the closing of the long-term policy funds at a lower interest rate, especially at a time when it’s very difficult to obtain investment funds,” the official said.
Ultium Cells’ Ohio plant began production in August. It is building two other plants in Michigan and Tennessee, respectively, with a plan to build a fourth plant in an undecided location in the U.S.
Once the three plants start full production after 2025, Ultium Cells expects the overall production capacity to increase to a maximum of 145 gigawatt hours, enough to power some 2 million all-electric vehicles, LGES said.
The loan is the first to have been approved for battery cell manufacturing under the Advanced Technology Vehicles Manufacturing program, a direct loan program designed to support the manufacturing of fuel-efficient vehicles and domestic manufacturing by automakers, the DOE said on its website.
(Yonhap)
