American taxpayers may provide a loan of more than $7.5 billion to a joint venture involving automaker Chrysler that plans to build electric vehicle batteries in Indiana.
On Monday, the U.S. Department of Energy’s Loan Program Office revealed that StarPlus Energy has received a “conditional commitment” for the multi-billion dollar loan. If approved, teh money would help the collaboration between FCA US and Samsung SDI Co. construct two lithium-ion battery plants in the Kokomo 50 miles north of Indianapolis.
The loan announcement comes after the Indiana Economic Development Corp. pledged hundreds of millions of dollars in state tax credits and incentives to the project.
Stellantis, FCA’s parent company, and Samsung first announced plans to build an electric vehicle battery plant in Kokomo in May 2022. Then, in October 2023, the partners announced they would construct a second plant.
According to Monday’s announcement, the project is expected to create up to 3,200 construction jobs as well as 2,800 plant jobs. The batteries built in Kokomo are forecasted to power about 670,000 electric cars each year.
Stellantis would purchase the batteries for the vehicles marketed in the United States.
An Energy Department fact sheet indicates that the interest rate for the loan would be the “applicable U.S. Treasury rate for the term of the loan with no credit spread.” No details on the term were immediately available.
“This project reinforces President Biden’s Investing in America agenda to onshore and reshore domestic manufacturing technologies,” the Energy Department’s statement said.
The loan would come through the federal government’s Advanced Technology Vehicles Manufacturing Loan Program, which was first established through the Energy Independence and Security Act of 2007. It would be the second Indiana plant to receive program funds. Last month, the Biden administration announced the finalization of a $1.3 billion loan to ENTEK, which is constructing a factory in Terre Haute to make separators used in lithium-ion batteries.
The Biden administration and StarPlus must still complete some requirements before the loan can be finalized. Among them, StarPlus must create a Community Benefits Plan that demonstrates how the company will work with local officials and labor groups. The battery plants are being built using workers from local trade unions.
Administration officials are also expecting StarPlus to participate in the Justice40 Initiative, which calls for 40% of the benefits produced from the government’s investment to boost communities that are considered underinvested “and overburdened by pollution.”
