BlueOval SK, a joint venture between SK On Co. and global automaker Ford Motor Co., has applied for a loan under the U.S. government’s Advanced Technology Vehicle Manufacturing (ATVM) program, to finance the construction of its battery plants in the United States.
BlueOval SK filed for the ATVM program operated by the Loan Program Office (LPO) of the U.S. Department of Energy in the second half of last year. Market watchers estimate that BlueOval SK can raise 3 trillion won to 5 trillion won (US$3.91 billion).
The United States has been running the program since 2007 to nurture the advanced automobile industry in the United States.
Last year, the LPO conducted an environmental assessment of BlueOval SK’s battery factories under construction in Stanton, Tennessee and Glendale, Kentucky to check the company’s loan qualifications. At the end of December 2022, it reached a conclusion that the battery factories will have no significant impact on the environment.
If BlueOval SK passes LPO’s environmental evaluation, it will be able to take out a loan amounting to 30 percent of the project cost in the first quarter of this year at the earliest or during the second quarter at the latest. As SK On and Ford decided to build three battery plants in the United States by investing 5.1 trillion won each (a total of 10.2 trillion won), the loan is expected to top three trillion won.
Ford already has the experience of using the LPO program. In September 2009, Ford borrowed US$5.9 billion for the purpose of expanding its Louisville, Kentucky, and Dearborn, Michigan plants.
In January 2010, Tesla also received US$465 million from the LPO for the construction of a factory in Fremont, California. In July last year, Syrah Vidalia, a battery anode material company, received a loan of US$1.021 billion. Among foreign companies, Nissan borrowed US$1.45 billion in January 2010 to build electric vehicle battery production facilities at its plant in Tennessee.
If BlueOval SK receives a loan from LPO, it will secure large funds at an interest rate as low as that of U.S. government bonds. This will help improve the financial conditions of SK On, which is simultaneously building and expanding battery factories in the United States, China, and Hungary.