Almost a dozen U.S. auto factories will collectively receive $1.7 billion from the Biden administration to retool themselves to make electric vehicles.
The funding from the Inflation Reduction Act, announced Thursday by the White House and Department of Energy, aims to bolster a flagging part of the auto sector — older plants that are idling because of the transition away from fossil fuels or other economic challenges. Until now, it was not known who would receive the grants, or how they would be used.
The funding also comes as President Joe Biden’s EV agenda is under assault from presumptive Republican nominee Donald Trump, who currently leads the race for the White House and has pledged to reduce support for the technology. The administration has been pushing to get IRA money out the door before a potential Trump administration would have more control over how funds are spent and when they are distributed.
“It’s really important that the federal government do what it can to ensure that the manufacturing facilities we already have, or those that were recently shuttered, are brought back online or built up to support the EV transition,” said Nick Nigro, the founder of Atlas Public Policy, which analyzes EV data.
Currently, China dominates the supply chain for EVs and, increasingly, sales of EVs themselves. That is putting pressure on the American auto industry to use its resources carefully in a shifting global landscape to be able to compete.
The announced funds especially will blanket the Midwest — including the battleground states of Michigan and Pennsylvania — and expand or replace existing factories, some of which are struggling or shuttered.
Many types of factories are getting transition aid: automakers General Motors and Stellantis, the truck-maker Volvo, bus manufacturer Blue Bird, iconic motorcycle-maker Harley Davidson and big producers of auto parts like Cummins and Mobis.
The conversion grants — which follow previous EV tax breaks and other incentives from the IRA — are considered significant for converting the huge, multifaceted auto manufacturing industry to a new electric platform.
The Biden administration is using the grants to drum up voter support during a tough reelection campaign. On Thursday, Energy Secretary Jennifer Granholm will tour one of the beneficiary factories in Michigan and another Friday in Ohio.
The Inflation Reduction Act appropriated $2 billion overall for the conversion grants, which also can be used to make hybrids, plug-in hybrids and hydrogen fuel cell vehicles.
On a call with reporters, Granholm called the factories receiving funds “at-risk facilities,” although many of them face no immediate threat of closure. The law called for grants to prioritize “refurbishment and retooling of manufacturing facilities that have recently ceased operation or will cease operation in the near future.”
Roughly four times as many factory operators applied for the grants as got them, according to an administration official.
Camilo Ballesty, GM’s vice president of North America manufacturing and labor relations, said in a statement that the conversion showed GM’s “commitment to U.S. leadership in manufacturing and innovation, making sure we’re competitive at home and abroad.”
GM, like the other recipients, has to provide its own funds to match the federal grant.
Granholm said the factories will enable the production of 11 million EVs a year and 40,000 electric trucks and buses. In comparison, U.S. car buyers purchased a fraction of that last year — more than 1.4 million EVs.
The administration heavily favored companies that committed to union labor, a consistent priority of Biden. Granholm said, “We competitively selected these projects to protect high skilled, high quality auto jobs.”
Last year, striking autoworkers expressed concerns about EVs — signaling a political risk for Biden in battleground states where the union vote is critical for the outcome.
The United Automobile Workers has been ambivalent about the transition to EVs, concerned that job losses could follow vehicles that have fewer parts and are simpler to make. However, the UAW has not yet seen job losses related to EVs and endorsed Biden for reelection.
Along with GM, the grant awardees are:
— Stellantis, $335 million. The European parent of American brands Ram, Dodge, Jeep and Chrysler will reopen the Belvidere Assembly Plant outside of Chicago and switch from making traditional engines to producing EVs.
Stellantis announced in late 2022 that it would shut the factory and laid off workers last year. The Belvidere plant was saved by the United Auto Workers, which demanded that Stellantis reopen it as part of last year’s auto labor negotiations. Stellantis promised at the time that it would make a new truck at the facility and would open a battery plant.
With the new funds, Stellantis promised the U.S. government that it “would re-employ approximately 1,450 unionized and highly skilled employees,” according to an administration fact sheet.
— Stellantis, $250 million. The automaker will stop making transmissions — a key part of an internal-combustion-engine cars — at a facility in Indiana and start making EV drive modules. Stellantis will keep and retrain 585 workers, all of whom are represented by the United Auto Workers.
— Volvo, $208 million. The Swedish truck-maker will dial back production of traditional Volvo and Mack trucks and upgrade three of its existing plants in Pennsylvania, Michigan and Virginia to make battery-electric and fuel-cell versions. The combination will make its vehicles “more efficient to produce and thus more cost-effective,” according to the administration release. Along with retraining at least some of its 7,900 workers, Volvo plans to add 295 new jobs.
— ZF Group, $157 million. This German auto parts supplier will dedicate a portion of its auto-parts factory in Marysville, Michigan, and convert it to making components for EVs.
— Harley Davidson, $89 million. The motorcycle manufacturer will expand an existing factory for electric motorcycles in York, Pennsylvania, adding new paint and assembly facilities. It will hire 125 new workers.
— Blue Bird, $80 million. The U.S. bus maker will reboot a closed factory in Fort Valley, Georgia, that made diesel-powered motor homes. Its new purpose will be to manufacture electric school buses. Blue Bird’s workers unionized last year with the United Steelworkers, and this May, the company and workers signed their first contract. Blue Bird expects to add 400 jobs.
— Cummins, $75 million. Cummins, a maker of engines and power systems, will give over part of its engine plant in Columbus, Indiana, to make battery and drive systems for electric trucks, buses and heavy off-road vehicles It will add 250 jobs.
— Mobis, $32 million. This auto parts maker, a division of Korean automaker Hyundai, will retool two factories in Toledo, Ohio. One of them — a factory line that sits inside a Stellantis auto-assembly plant — will expand from making traditional auto chassis to also making chassis for a plug-in hybrid truck. Across town, it will build a new battery-pack assembly plant for plug-in hybrid trucks, SUVs and minivans. Between the two, Mobis expects to add 223 jobs.
