The United States is investing $15.5 billion in retooling car factories for the production of EVs. Recently, the U.S. Department of Energy announced a new plan to make the necessary adjustments to car factories for the transition to electric vehicle production. This “Domestic Conversion Grant Program” involves an investment of $15.5 billion.
This support was released under the Inflation Reduction Act (IRA), a law passed by the U.S. Congress last year to “protect the national interests of the United States.” It allows for $400 billion to be spent on promoting clean energy. The Biden administration has decided to allocate $15.5 billion within this framework for the conversion of car factories, enabling them to soon assemble electrified vehicles and also produce the necessary components for them.
With this ambitious investment program, the U.S. government aims to provide a boost to the national automakers, especially Ford and General Motors, who are currently facing challenges in producing profitable electric vehicles. The Department of Energy reported that “the Domestic Conversion Grant Program is intended to support the transformation of factories to produce local hybrid, plug-in hybrid, 100% electric, and hydrogen vehicles.”
The Department of Energy specifies that “automakers, depending on their capital needs, can apply for support in the form of financial subsidies” through the Office of Manufacturing and Energy Supply Chains. The idea behind this plan is also to preserve jobs at locations where this transformation has not yet been initiated to prevent mass layoffs resulting from the announced end of the combustion engine.
In addition to supporting giants in the automotive sector, the government also wants to lend a helping hand to American start-ups specializing in electric vehicles, such as Rivian and Lucid. These are small companies that are still struggling to scale up production and are facing significant losses. This plan is another way for the country to strengthen its domestic supply chains and, furthermore, for Joe Biden to stay on track with addressing climate change.
The American president is aware that his auto industry is at a turning point. Jennifer M. Granholm, the U.S. Secretary of Energy, stated,
“President Biden is investing in the workforce and factories that have made our country a global manufacturing powerhouse. Our recent announcements demonstrate that the president understands that building the cars of the future means helping companies transition to the end of the combustion engine.”
Indeed, some manufacturers in the U.S. have already begun the process of converting their factories to produce electric vehicles. This is the case, for example, at the Honda plant in Marysville, Ohio. The same applies to the Toyota site in Georgetown, where electrified vehicles will soon be rolling off the production lines. General Motors is also following this example at its Detroit-Hamtramck plant.
About the author: John Campbell
John Campbell is the godfather of Polimedia and the oldest author from the whole team. His occasional guidance is crucial for everyone he advises.