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Biden Administration Plans to Invest $2 Billion Towards Domestic EV Manufacturing

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The Biden administration has unveiled plans to allocate $2 billion from the Inflation Reduction Act of the previous year towards the advancement of domestic electric vehicle (EV) manufacturing. The aim of this initiative is to bolster the struggling plants and expedite the production of electric vehicles within the United States. By providing accelerated grants and subsidies, the government hopes to fund the conversion of existing automobile manufacturing facilities for EV production, thus addressing concerns raised by the United Auto Workers (UAW) union regarding new environmental regulations associated with the EV era.

Under the Domestic Manufacturing Conversion Grants for EVs program, cost-shared grants will be offered to support the development of efficient hybrid, plug-in electric hybrid, fully electric, and fuel cell vehicles. The program, led by the Department of Energy’s Vehicle Technologies Office, will prioritize projects that revitalize or repurpose manufacturing plants that have recently halted operations or were at risk of closure. This strategy aims to preserve existing jobs, including those within the union, and foster employment opportunities in communities that have long been integral to the automotive industry.

In recent EV company events, Lordstown Motors, an electric truck manufacturer based in Ohio, filed for bankruptcy protection. This filing marks another instance of a startup that went public during the surge of Special Purpose Acquisition Companies (SPAC) amidst the pandemic, subsequently seeking Chapter 11 protection.

As part of the broader objective to decarbonize the economy by 2050, the Biden administration is strongly urging the U.S. auto industry to accelerate its transition towards EVs. The Environmental Protection Agency has proposed regulations that could result in up to two-thirds of the new vehicle market shifting to electric vehicles by 2032. However, the UAW has expressed concerns about the potential job losses associated with such a rapid transition, particularly in states like Michigan, Ohio, Illinois, and Indiana. UAW President Shawn Fain has been actively campaigning to save the Jeep factory in Belvidere, Illinois, which Stellantis NV had planned to shut down. There remains a possibility that the factory could receive a new product line with the aid of government support.

Individual awards through the grant program may range from $25 million to $500 million, and the funding for these grants will be available until September 2031. It’s important to note that the notice of intent issued by the Energy Department is preliminary and may be followed by a funding announcement that is either similar, significantly different, or not issued at all, according to their statement.

Source: Reuters

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