The U.S. Department of Energy (DOE) announced the closing of a $2.5 billion loan to Ultium Cells, a joint venture between General Motors (GM) and LG Energy Solutions, to construct three new lithium-ion battery manufacturing units in Ohio, Tennessee, and Michigan.

The battery cells will meet the requirements of electric vehicles (EVs) amidst a growing demand in the country.

The funding will directly support the goal of having EVs cover over half of all new vehicle sales by 2030 while bolstering net zero targets by 2050.

It is the first loan closed by the Loan Programs Office (LPO) – an affiliate of DOE —  which is exclusively for a battery cell manufacturing project under the Advanced Technology Vehicles Manufacturing (ATVM) program

In July this year, LPO issued a conditional commitment for the loan to Ultium Cells to produce large format, pouch-type cells that use uncommon chemistry to fetch more range at a lower price. These cells can be arranged in various combinations to provide clean and reliable energy for all vehicles running on the road currently.

Ultium Cells aims to use the expertise of GM to mitigate 100% of tailpipe emissions from its new U.S. light-duty vehicles by 2035. GM will also use loans to upgrade its capacity to produce over a million EVs annually in North America by 2040 while making all its products carbon-free.

The project is expected to create over 11,000 jobs, including 6,000 construction jobs and 5,100 jobs in operations across the three facilities and over 700 United Auto Worker jobs in the newly organized Warren, Ohio facility.

U.S. Secretary of Energy Jennifer M. Granholm. “This loan will jumpstart the domestic battery cell production needed to reduce our reliance on other countries to meet increased demand and support President Biden’s goals of widespread EV adoption and cutting carbon pollution produced by gas-powered vehicles.”

The loan closing comes after the launch of the American Battery Materials initiative by President Biden in October this year. To help build out the battery mineral and material supply chain in the U.S., the President also declared $2.8 billion in grants from DOE.

Until October, the DOE said it had received 98 applications for projects across America totaling more than $104 billion in requested loans and loan guarantees.

The Inflation Reduction Act passed in August makes additional investments in ATVM by appropriating $3 billion for the costs of direct loans, which will be available through September 2028.

Earlier this year, the DOE issued a Request for Information to help guide the implementation of $335 million investments from the President’s Bipartisan Infrastructure Law for lithium-ion battery recycling programs.