President Joe Biden’s administration on Wednesday said it intends to invest $2 billion from last year’s Inflation Reduction Act to accelerate domestic manufacturing of electric vehicles and resuscitate plants that are struggling.
Speeding grants and other subsidies to fund conversion of existing auto plants to build electric vehicles could help the White House blunt criticism from auto makers and the United Auto Workers (UAW) union over proposed environmental rules aimed to help usher in the EV era.
The Domestic Manufacturing Conversion Grants for EVs program will provide cost-shared grants for making efficient hybrid, plug-in electric hybrid, fully electric, and fuel cell vehicles.
The Department of Energy’s Vehicle Technologies Office said the program will prioritize projects that refurbish or retool manufacturing plants that have recently stopped operations or were expected to close soon.
The goal is to preserve existing jobs, including union jobs and wages, and “work opportunities in communities that have been powering our automotive economy for decades,” it said.
Ohio-based electric truck maker Lordstown Motors filed for bankruptcy protection on Tuesday, the latest filing for Chapter 11 protection in a crop of startups that went public during the pandemic-era boom in Special Purpose Acquisition Companies (SPAC), which were publicly listed companies aimed at acquiring private companies.
The Biden administration, as part of its goal of decarbonizing the economy by 2050, is pushing the U.S. auto industry to accelerate a transition to EVs. The Environmental Protection Agency (EPA) in April proposed rules that could result in as much as two-thirds of the new vehicle market shifting to EVs by 2032.
The Alliance for Automotive Innovation, which represents General Motors, Stellantis NV, Toyota Motor and others, on Wednesday called the EPA proposal a “de facto battery electric vehicle mandate” that was “neither reasonable nor achievable.”
The UAW has warned such a rapid change could put thousands of jobs at risk in states such as Michigan, Ohio, Illinois, and Indiana. Shawn Fain, the UAW president, has campaigned to save a Jeep factory in Belvidere, Illinois, that Stellantis has put on track to shut down. The automaker has left open the possibility that the factory could get a new product with government aid.
Individual awards may be between $25 million and $500 million and funding for the grants would be available through September, 2031.
The notice of intent the Energy Department issued on Wednesday is preliminary. The notice may soon be followed by funding announcement that is similar to the notice, significantly different, or may not be issued at all, it said.