The US Department of Energy has announcement on August 31, 2023 a new plan to convert the country’s car factories to electric vehicles: the Domestic Conversion Grant Program. 15.5 billion dollars will be devoted to this major transformation.
$15.5 billion to convert factories
This aid was released under the Inflation Reduction Act (IRA), a text passed last year by the US Congress to ” to protect the national interests of the United States “. 400 billion dollars must be devoted to clean energy. The Biden administration has therefore decided to spend 15.5 billion to convert the country’s auto factories to help them assemble electrified vehicles and manufacture components.
— U.S. Department of Energy (@ENERGY) August 31, 2023
The US government wants to give a boost to its domestic manufacturers, Ford and General Motors in particular, which are struggling to make a profit from electric vehicles. In the press release from the Ministry of Energy, we can read that ” the Domestic Conversion Grant Program should support the transformation of factories to locally manufacture hybrid, rechargeable hybrid, 100% electric and hydrogen vehicles ».
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According to the ministry, depending on their capital needs, “vehicle manufacturers can apply for assistance in the form of financial subsidies” through theOffice of Manufacturing and Energy Supply Chains. The idea behind this plan is also to keep jobs on sites that have not yet started their transformation to avoid massive layoffs because of the announced end of thermal power.
Joe Biden anticipates the advent of electric vehicles
In addition to supporting the giants of the automotive sector, the government also wants to give a boost to American start-ups specializing in electric vehicles such as Rivian and Lucid. Small businesses still struggling to increase production and facing significant losses. This plan is one more way for the country to strengthen its domestic supply chains. Joe Biden wants to be there on the climate.
Why is General Motors having such a hard time producing electric vehicles?
Joe Biden is aware that the auto industry is at a tipping point. Jennifer M. Granholm, U.S. Secretary of Energy, points out that ” President Biden is investing in the workforce and factories that have made our country a global manufacturing power. Our recent announcements show the President understands that building the cars of the future requires helping companies facing the transition to the end of the internal combustion engine ».
Some factories have already started their conversion
Some manufacturers have already started to convert their factories to electric vehicles on American soil. This is for example the case of Honda at the site in Marysville, Ohio. Same thing on the side of Toyota in Georgetown, where electrified vehicles will soon roll off the production lines. General Motors is also trying to follow suit. The American manufacturer has already transformed its Detroit-Hamtramck plant into ” factory zero ».
In Europe, Ford recently opened the Ford Electric Vehicle Center, its first electric vehicle assembly plant. In Cologne, the American manufacturer has spent 2 billion dollars to convert this gigantic 125-hectare factory. Eventually, its annual production capacity will be 250,000 electric cars. The 100% electric Ford Explorer will notably be produced there this year. A first transformation that marks a new era at Ford.
In France, the Stellantis foundry in Mulhouse is also going electric. The site will henceforth be dedicated to the manufacture of aluminum parts for electric motors. 50% of the capacity of the Alsatian foundry will be devoted to this new activity. The automotive giant anticipates “ the evolution of demand which is gradually switching from thermal models to electric “. Stellantis has promised 100 vehicle launches (including 75 electric) with at least 10 new models from 2022 to 2030.