Sector Spotlight – Advanced Vehicle Components

In this post, I’ll explore how the DOE Loan Programs Office is supporting advanced vehicle component projects.??

Automakers’ commitment to increasing the average efficiency of their annual vehicle offerings has led to noticeable year-over-year declines in CO2e emissions from on-road transportation over the past two decades. In recent history, nascent growth in light-duty market share for electric vehicles (EVs) began leading improvements in average vehicle efficiency as incremental internal combustion engine (ICE) improvements slowed. Today, along with an EV market that continues to grow, advanced component innovations now drive increases in average efficiency, in many cases offering enhanced vehicle performance with less mass or material. Over the next 30 years, efficiency improvements could reduce EV’s average electricity consumption per mile by half, recent modeling suggests.?

The basic EV powertrain – which includes the battery pack, traction motor, full-vehicle wiring, power electronics, and thermal management systems – contains relatively few components compared to ICE vehicles. Though they are fewer, each of these components contain many subcomponents that rely on the superior electrical properties of their constituent materials.? Most of these materials are processed from the limited pool of raw materials the Biden Administration has identified as critical (featured in LPO’s critical materials sector spotlight), but not all. For select subcomponents like the battery separator or assembled cells, novel manufacturing techniques that enhance mechanical properties drive innovation as much as or more so than material chemistries. While EVs have a spotlight for their consumer applications, the return on any innovation boils down to the importance of the component to a particular type of advanced vehicle. For instance, though power electronic innovations are particularly impactful for EVs, estimated to contain twice as many semiconductors by weight as conventional vehicles, they may also contribute to increased efficiency for vehicle types beyond EVs, such as hydrogen fuel cell and even ICE.??

Supply chains that support alternatives to battery electric will continue to grow as technology markets mature. Clean fuel alternatives like hydrogen, biomass-derived fuels, and sustainable petrochemical replacements will be necessary to decarbonize medium- and heavy-duty vehicles as well as non-road sectors like aviation and maritime. Across vehicle technologies, Inflation Reduction Act tax credits are incentivizing advanced automotive manufacturing and clean fuel production to onshore to the US. The domestic content bonuses across many of these credits are making the option similarly irresistible for advanced component manufacturers.?

By and large, LPO’s Advanced Technology Vehicles Manufacturing program (ATVM) is the most popular program for manufacturers of advanced vehicle components. ATVM can support the manufacture of qualifying components for on-road light-duty, medium-duty, and heavy-duty vehicles that support and meet specific reduction standards for each type, as well as for non-road transportation like trains, maritime vessels, aircraft and hyperloop technology that meet more general zero or low emission thresholds.? With the exception of the CO2 Transportation Infrastructure program, LPO’s other programs could conceivably support an advanced vehicle component manufacturing project, but the additional requirements of these programs and higher costs compared to ATVM mean that in practice, most eligible borrowers prefer ATVM for their project. The most common reason applicants in this space choose to apply to another program over ATVM is when they expect project output will be used primarily in non-vehicle applications -- the strategic decision of an applicant manufacturing rare earth magnets to court an offtaker for wind power applications rather than for use in EV motors, as one general example. LPO’s Outreach team is happy to discuss the best program fit for a potential project.??

As of the end of June 2024, financing requested from LPO for Advanced Vehicle and Component projects totaled $16.8 billion. For more current details, view LPO’s Monthly Application Activity Report, which explains the level of interest from applicants for LPO financing and what technology sectors have been most actively engaged with LPO.?

ADVANCED VEHICLE COMPONENTS - SK SILTRON?

In February 2024, LPO, announced an $544 conditional commitment to SK Siltron CSS, LLC to expand American manufacturing of high-quality silicon carbide (SiC) wafers for EV power electronics in Bay City, Michigan. The facility is projected to be among the top-five manufacturers of SiC wafers globally.?

SiC semiconductors are designed for high-voltage use and are critical components of EV drivetrains, including inverters, and electrical distribution systems like onboard chargers and DC-to-DC converters. SiC semiconductors allow for higher efficiency and higher voltage, which can mean faster charging times and up to 10% longer range when compared with traditional silicon semiconductors. High-quality wafers are currently under-supplied, and demand is expected to rise with EV sales, which saw unprecedented progress in 2023.?

ADVANCED VEHICLE COMPONENTS? - CELLINK?

In April 2024, LPO closed a $362 million loan to CelLink Corporation to help finance the construction of a domestic manufacturing facility in Georgetown, Texas. The facility will produce lighter and more efficient flexible circuit wiring harnesses—sets of wires and related equipment that relay information and carry electricity throughout vehicles. Once fully operational, the facility is expected to produce enough wiring harnesses to support the manufacture of approximately 2.7 million EVs per year. At its existing California facility, CelLink has produced wiring harnesses for over a million vehicles already on the road.?

CelLink’s domestically produced “flex harnesses,” are lighter, smaller, quicker to produce, and are expected to be less expensive than conventional wiring harnesses. The flat design of CelLink’s flex harnesses can reduce vehicle weight, provide better heat dissipation for improved propulsion system efficiency, and lower vehicle manufacturing costs. CelLink’s technology, now in demand in the EV and general automotive markets, has applications across numerous other industries, including aviation and aerospace. Most wire harness production for the U.S. market currently occurs in countries with low labor costs due to the complex manual processes associated with traditional assembly.?

ADVANCED BATTERY COMPONENTS – ENTEK?

In July 2024, LPO announced a conditional commitment of up to $1.2 billion for a direct loan to ENTEK Lithium Separators LLC (ENTEK). If finalized, the loan will substantially?finance a new facility in Terre Haute, Indiana to manufacture?lithium-ion battery separators, the membrane sandwiched between the anode and cathode of a battery. The separators will be used primarily in EVs—strengthening the U.S. lithium-ion battery cells supply chain and enabling the creation of batteries used in advanced technology vehicles.?

A battery separator is and plays an essential role in the performance and safety of lithium-ion batteries. The project will make a significant contribution to growth in domestic battery separator capacity and help U.S. EV manufacturers satisfy battery component sourcing requirements under the 30D Clean Vehicle Credit. ENTEK will be able to customize battery separators to accommodate numerous EV battery designs as well as all existing lithium-ion EV battery chemistries.?

BATTERY CELL MANUFACTURING – ULTIUM CELLS??

In December 2022, DOE announced the closing of a $2.5 billion loan to Ultium Cells LLC to help finance the construction of new lithium-ion battery cell manufacturing facilities in Ohio, Tennessee, and Michigan. Ultium Cells, a joint venture between General Motors and LG Energy Solutions, will manage battery cell production at the three facilities, as a critical move to address the growing demand for EVs.?

Ultium’s large format, pouch-type cells use a state-of-the-art chemistry to deliver more range at a lower cost. Cells can be arranged in different combinations to provide clean, reliable energy for all vehicles on the road today, including pickups, SUVs and other family vehicles, as well luxury vehicles and commercial vehicles. Ultium Cells plans to use this technology in coordination with GM’s work to eliminate 100% of tailpipe emissions from its new U.S. light-duty vehicles by 2035.??

BATTERY CELL MANUFACTURING - BLUEOVAL SK?

In June 2023, LPO announced an up to $9.2 billion conditional commitment to Blue Oval SK LLC to construct three manufacturing plants -- one located in Tennessee and two in Kentucky. BOSK is a joint venture between Ford Motor Company (Ford) and SK On, a global leading Korean EV battery manufacturer.?

The U.S. is experiencing strong growing consumer demand for electric vehicles, which will necessitate the production of more EV battery cells. This project will help build a more resilient domestic supply chain to meet this growing EV demand. The project will enable more than 120 gigawatt hours of U.S. battery production annually and displace more than 455 million gallons of gasoline per year for the lifetime of the vehicles powered by these batteries.??

NEWS ROUNDUP?

• US silicon carbide wafers just got a big boost – here's why it matters for EVs (Electrek)?
• Why DOE is funding a wiring company you've never heard of (Latitude Media)??
• VP Harris in Detroit: New $100 million coming to help auto parts makers prep for EVs (The Detroit News)?
• Biden admin offers $1.2B loan [conditionally to Entek] to expand US battery supply chain (Canary Media)??
• Biden administration announces $2.5 billion loan to help GM and LG make EV batteries (CNN)?
• Ford-SK venture to get $9.2 billion US loan for battery plants (Reuters)?
• DOE announces $15.5B to support electric vehicle transition, grow domestic battery manufacturing (Utility Dive)?