The US Energy Department has announced that it will be providing a total of $1.7 billion in funding to car and auto parts factories in eight states. This funding is intended to help these factories transition to building electric vehicles and their components. The money for this initiative will come from President Biden’s Inflation Reduction Act, which includes subsidies for EV and battery plants, as well as $7,500 tax credits for consumers who purchase electric vehicles.
One of the 11 recipients of this funding is a Jeep factory in Belvidere, Illinois, which closed down last year. With the $334.8 million it will receive, the factory plans to reopen and start producing electric vehicles, thereby restoring 1,450 jobs. General Motors will also benefit from this initiative, receiving $500 million to convert a plant in Lansing, Michigan to produce EVs instead of gasoline cars. Additionally, the US subsidiary of Korean auto parts maker Hyundai Mobis will receive $32.6 million to retrofit a plant in Toledo, Ohio for the production of plug-in vehicle components.
Government officials have stated that they selected communities that have been disproportionately affected by pollution or lack of investment. Another key criteria for selection was that all the selected companies have employees who are represented by unions. While the grants have been awarded, the companies still need to negotiate terms with the Department of Energy. They will need to commit to retaining their current workers despite the shift to EV production and meet certain employment targets. Furthermore, the companies are required to provide benefits such as child care, pensions, and training opportunities for their workers.
According to The New York Times, many of the factories chosen for this initiative are located in “battleground states” for the upcoming presidential elections. President Biden has expressed that this investment will lead to the creation of thousands of good-paying, union manufacturing jobs and help to revitalize communities that have been left behind. Jennifer Granholm, the US Energy secretary, believes that this funding will help retain 15,000 jobs and create 3,000 new ones, while also enhancing the US’s competitiveness in the global auto industry.
Granholm also highlighted that this initiative will allow the US to compete with other countries that heavily subsidize their auto industries. China, for example, is known for providing significant subsidies to its EV manufacturers. Earlier this year, the US increased import tariffs for Chinese EVs, while the European Union announced plans to impose additional tariffs on Chinese-made electric vehicles to protect local manufacturers. This funding for US car factories is seen as a strategic move to boost the country’s EV industry and ensure its competitiveness on the global stage.
