Last year, the US Congress passed the Inflation Reduction Act, which directs nearly $400 billion in federal funding toward clean energy, via tax incentives, grants, and loans, as per McKinsey. Furthering its electrification efforts, the Biden administration has announced another $15.5 billion for retrofitting existing factories and rehiring workers.
The package includes $2B in grants and up to $10B in loans for repurposing ICE plants, the US Department of Energy (DOE) said on August 31, 2023. There’s also a “Notice of Intent” to make an additional $3.5B available for expanding the nation’s grid and boosting local battery manufacturing.
The administration appears to be targeting established automakers, who are struggling to turn profits with EV sales. The press release states:
In the Domestic Conversion Grant Program, higher scores will be given to projects that are likely to retain collective bargaining agreements and/or those that have an existing high-quality, high-wage hourly production workforce, such as applicants that currently pay top quartile wages in their industry.
The program would support retooling that involves local production of hybrid, plug-in hybrid, pure electric, and fuel-cell vehicles. It includes supporting factories with vehicle and component assembly, and related parts manufacturing. Moreover, it might also help start-ups like Rivian and Lucid, which are struggling to scale up production and face mounting losses.
Several automakers are retooling existing plants. Early this year, Honda announced the conversion of its Marysville Auto Plant in Ohio for the production of EVs and related components. Toyota is also retooling its Georgetown plant for upcoming vehicles as part of its EV strategy.
Even General Motors has committed to converting existing facilities into EV hubs. The automaker has already transformed its Detroit-Hamtramck facility into what’s now called Factory Zero. A recent report stated that the US would need to invest in improving grid infrastructure, while it continues to boost battery and vehicle production.
CNBC reported in July 2023 that the US would need between $20B to $30B to build new high-voltage transmission lines to transport clean energy across the country, and to cope with skyrocketing electricity needs, indicating that the current allocation of resources falls well short of the projected demand.