The Department of Energy is offering $15.5 billion in funding and loans for the retooling of U.S. factories to transition to the production of EVs.
The massive funding package includes $2 billion in grants and up to $10 billion in loans to support auto manufacturing conversion projects, the department announced yesterday. It also includes $3.5 billion to expand domestic battery manufacturing for EVs and the U.S. electrical grid, as well as for domestic production of battery materials.
A key goal of the funding is to retain existing workers as the industry shifts to EVs.
Groups including the United Auto Workers have grown increasingly anxious that their members will be left behind in the transition. UAW members near-unanimously approved strikes at GM, Ford and Stellantis last week if the sides can't agree on a new labor agreement.
The union applauded the Energy Department's new funding package, with UAW President Shawn Fain saying it showed the Biden administration's commitment to keeping workers engaged in the clean energy transition.
"The UAW supports and is ready for the transition to a clean auto industry. But the EV transition must be a just transition that ensures auto workers have a place in the new economy," Fain said in a statement. "This new policy makes clear to employers that the EV transition must include strong union partnerships with the high pay and safety standards that generations of UAW members have fought for and won."
The $2 billion grant program will give priority to projects that commit to pay high wages for production workers and maintain collective bargaining agreements, according to the department. The money will go towards facilities focused on vehicle assembly, component assembly and related vehicle part manufacturing.
Selected projects must also contribute to President Biden's Justice40 Initiative, which aims to advance diversity, equity and inclusion in the workforce as part of the clean energy transition.
Applications for grants are due Dec. 7, with selections expected to be made next spring.
The $10 billion in loans will go towards communities that currently host manufacturing sites to help retain jobs and high wages, as well as helping keep existing factories open when companies opt to build replacement facilities.
"Building a clean energy economy can and should provide a win-win opportunity for auto companies and unionized workers who have anchored the American economy for decades," President Joe Biden said in a statement. "This funding will help existing workers keep their jobs and have the first shot to fill new good jobs as the car industry transforms for future generations.”
Automakers have already started spending big money on revamping their factories to produce EVs.
Ford is investing $1.3 billion to convert its Ontario, Canada, site for EV production, and in January GM announced it would spend $64 million to support EV production in Rochester, New York, and Defiance, Ohio.