Department of Energy conditionally commits $7.54 billion to build Kokomo battery plants
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The U.S. Department of Energy announced on Dec. 2 that it will provide up to $7.54 billion in a loan to StarPlus Energy to help with the cost of building two electric vehicle battery “gigafactories” in Kokomo.
One of the two factories was announced in May 2022, and the second followed in October 2023, with a total projected price tag of $6.3 billion to construct. Construction on both facilities has been very active, and the first plant is expected to be in operation in the first quarter of 2025. The second plant is slated for operations some time in 2027.
Should everything go as proposed, Kokomo will produce about 670,000 EV batteries annually. It also will benefit from nearly 3,200 jobs, according to the Department of Energy’s figures, including 2,800 jobs between the two plants and an additional 400 or more jobs in support of the plants through ancillary businesses.
The government loan will require StarPlus to generate “good-paying” jobs and to meet several legal and financial conditions before the money is released. The $7.54 billion figure includes the principal loan amount of $6.85 billion as well as $688 million in interest to be paid.
The conditions set out by the Department of Energy for the awarding of the loan include a requirement to implement a Community Benefits Plan, designed to partner with community and labor stakeholders and improve their well-being. According to the Department of Energy, “The new StarPlus facilities are being constructed under the National Maintenance Agreement, a national collective bargaining agreement, overseen by the National Maintenance Agreement Policy Committee. The NMA, to which all local building trades unions are signatories, helps to ensure workforce continuity and mitigate project delays.”
The announcement comes at a time of transition for the federal government. While the current administration has been supportive of electric vehicle technology and investment, President-elect Donald Trump actively campaigned against the technology, vilifying it as a “scam.” It is unknown if he will renege on the loan once he takes office.
The loan is by no means a certainty. The Department of Energy previously committed in July to a $250 million loan to Stellantis to convert the Indiana Transmission Plant in Kokomo into a parts manufacturing site for electric vehicles. That loan has not been finalized.
The department also committed to $335 million loan to Stellantis to bring its Belvidere, Ill., manufacturing facility back online. That loan, too, has not been finalized.
As to whether the loans are honored by the next federal administration, the Department of Energy stated that it would be irresponsible for the government to “turn its back on private sector partners, states, and communities” that stand to gain from the investment. That group includes Kokomo.
“This will greatly expand EV battery manufacturing capacity in North America and reduce America's reliance on adversarial foreign nations like China,” the department said.
The federal government is not the only entity facing significant change. Stellantis CEO Carlos Tavares announced his resignation on Dec. 1, pushing his department forward by more than a year. He, and the company, have withered under criticism from investors, car dealers, and the unions representing Stellantis workers over the course of the year.
Sales of Stellantis vehicles have fallen aggressively, including by 20 percent in the third quarter of this year, and Tavares accepted responsibility for the failure. The company is now searching for a new CEO to replace the embattled Tavares.