US Intends to Invest $2 Billion from Last Year's IRA, Accelerating Domestic Manufacturing of EVs

President Joe Biden's administration stated that they have been planning to invest up to $2 billion from last year's Inflation Reduction Act. Through this effort, the investment aims to accelerate the domestic manufacturing of electric vehicles and struggling plants.

Domestic Manufacturing Conversion Grants for EVs Program

The federal government is planning to provide a total grant of up to $2 billion to help speed up the process of the impending electric vehicle transition in the United States. According to a report from Reuters, this effort could help the White House to decrease criticisms from automakers and car companies, including the United Auto Workers Union (UAW), over proposed environmental rules.

This program will be called the Domestic Manufacturing Conversion Grants for EVs, providing cost-shared grants for making efficient vehicles. This will include hybrid, plug-in electric hybrid, fuel cell, and fully electric. Once approved, potential awards may be between $25 million and $500 million, and funding for the grants would be available until September 2031.

The Department of Energy's Vehicle Technologies Office stated that this will prioritize projects that upgrade the manufacturing plants that recently halted their operations and are soon to close. Through this program, existing jobs will be preserved like union jobs and wages and work opportunities in different communities that have been powering the automotive economy for years.

As part of the Biden administration's goal of decarbonizing the economy by 2050, the government will push the auto industry in the country in order to elevate the transition to electric vehicles. Based on the proposed rules by the EPA, the result could be as much as two-thirds of the new vehicle market shifting to EVs only in 2032.

Automakers' Complain

The EPA proposal was called by the Alliance for Automotive Innovation a "de facto battery electric vehicle mandate" that was described by the group as neither reasonable nor achievable. This group represents different automakers, including General Motors, Stellantis NV, Toyota Motors, and more.

Meanwhile, the UAW gave a warning about this rapid change that could eventually lead to putting thousands of jobs at risk in several states, like Michigan, Ohio, Illinois, and Indiana. UAW President Shawn Fain previously campaigned to save a Jeep factory in Illinois, putting Stellantis' track to shut down.

Last Tuesday, Ohio-based electric truck maker Lordstwon Motors filed for bankruptcy protection, becoming the latest filing for Chapter 11 protection in a crop of startup companies that went public during the pandemic when the market was booming overwhelmingly in Special Purpose Acquisition Companies. These were publicly listed companies aimed at purchasing private companies.

Passing the Grant

Although this issued notice from the Energy Department is still preliminary and was released ahead of, Washington Examiner reported that this may soon be followed by a funding announcement that will be very similar to this, significantly different, or may not be issued at all.

The notice stated, "It is anticipated that the FOA would strengthen the domestic manufacturing of electrified vehicles of these given types, including light, medium, and heavy‐duty vehicles, and create good‐paying clean energy jobs with the free and fair chance to join a union."