On August 31, the Biden administration announced a financial package amounting to $15.5 billion to support US automakers in upgrading their existing gas-powered vehicle plants into facilities that manufacture electric vehicles (EVs).
The funding from the US Department of Energy (DOE) includes $2 billion in grants to convert manufacturing facilities and expand the production of hybrid, battery-powered, and hydrogen fuel-cell vehicles. Additionally, the DOE plans to offer up to $10 billion through the Advanced Technology Vehicles Manufacturing Loan Program to support conversion projects. The Bipartisan Infrastructure Law may also allocate $3.5 billion to expand domestic battery manufacturing.
This announcement comes at a pivotal time for the US auto industry. There are increasing concerns among workers regarding potential job eliminations and employment shifts as the transportation sector moves towards electrification.
The Department of Energy introduced this funding just days after the nation’s largest auto union, the United Auto Workers, authorized a strike against major automakers such as General Motors, Ford, and Stellantis. The union demands include increasing wages, bringing back cost-of-living adjustments, and enhancing pension plans. If an agreement is not reached by September 14, a strike could occur.
The auto giants have already reduced employment, offered buyouts, and idled automotive plants in response to the transition to EVs.
Detroit automakers and their joint-venture partners are constructing new EV factories in Michigan, Indiana, Ohio, Kentucky, Tennessee, Georgia, and the Carolinas. These facilities are dedicated to lithium processing, battery production, and EV material recycling.
Significant tax incentives provided under the Inflation Reduction Act are fueling a substantial portion of this expansion, particularly within the Southeast region. Similar momentum is also attributed to the implementation of “right-to-work” policies in these states. Right-to-work policies have sought to curtail union influence and grant automakers greater authority over their workforce.
Shawn Fain, the president of the UAW (United Auto Workers), has expressed the necessity for union representation at the new EV and battery plants. Fain recently voiced disappointment regarding the Inflation Reduction Act, as it lacks provisions guaranteeing adequate compensation for auto workers.
In a June press release, Fain emphasized that the shift towards electric engine jobs, battery production, and other EV manufacturing must not result in a degradation of employment standards.
United Auto Workers (UAW) union President Shawn Fain harshly criticized the U.S. Energy Department plan to lend $9.2 billion to a joint venture of #Ford Motor (F.N) and South Korea's SK On to build three U.S. battery plants. pic.twitter.com/nmnZrQEG8a
— Berlinergy (@Berlinergy) June 25, 2023
Fain praised the newly announced DOE grants and loans, underscoring their potential to safeguard at-risk auto plants and their surrounding communities. The EV spending package is likely to prove particularly helpful to endangered auto plants in Belvidere, Illinois; Lordstown, Ohio; and Romeo, Michigan.
Secretary of Energy Jennifer Granholm acknowledged the potential implications of the recently announced funding on the ongoing negotiations between the UAW and Detroit automakers. While she couldn’t definitively comment on its impact, Granholm assured that the Biden administration has engaged in productive discussions with the relevant stakeholders, including automakers, auto workers, and affected communities.
According to Canary Media, the administration aims to direct funding towards projects in established automaking communities. This will prioritize the preservation of existing jobs and the promotion of collective bargaining agreements.