In a significant move aligning with President Biden’s “Investing in America” agenda, the U.S. Department of Energy (DOE) has unveiled a substantial $15.5bn funding and loans package.

The primary focus of this initiative is to retool existing factories to facilitate the transition to electric vehicles (EVs), with a strong emphasis on creating quality jobs and ensuring a just transition to the EV era.

The DOE is earmarking $2bn in grants and up to $10bn in loans to support automotive manufacturing conversion projects. These projects will play a crucial role in retaining high-quality jobs within communities that currently host these manufacturing facilities.

Notably, the Domestic Conversion Grant Program will award higher scores to projects likely to maintain collective bargaining agreements and those with an existing high-wage hourly production workforce, such as applicants paying top quartile wages in their industry.

The federal investments underpin President Biden’s commitment to preserving and expanding high-paying manufacturing jobs while empowering workers to participate in the economic advantages of the clean energy transition. These initiatives also contribute to national security by strengthening domestic supply chains, which are essential to achieving ambitious climate goals.

US Secretary of Energy Jennifer Granholm said: “President Biden is investing in the workforce and factories that made our country a global manufacturing powerhouse.” Granholm emphasised that these initiatives acknowledge the importance of supporting communities facing challenges during the transition from internal combustion engines.

Manufacturers seeking support can choose between financial grants through the DOE’s Office of Manufacturing and Energy Supply Chains (MESC) or preferential debt financing through DOE’s Loan Program Office.

A new $2bn funding opportunity has been introduced to encourage the conversion of established facilities into manufacturing hubs for electric vehicles and components. This program aligns with the President’s Inflation Reduction Act.

The Domestic Manufacturing Conversion Grants for electrified vehicles program aims to provide cost-shared grants, fostering the production of efficient hybrid, plug-in electric hybrid, plug-in electric drive, and hydrogen fuel cell electric vehicles. It covers light-, medium-, and heavy-duty electrified vehicles and components.

Special attention is given to supporting a just transition for workers and communities associated with long-standing automotive manufacturing facilities. Projects promoting high wages for production workers and collective bargaining agreements receive preference.

Projects selected for funding must align with the President’s Justice40 Initiative, which focuses on diversity, equity, inclusion, and accessibility in America’s workforce.

The goal is to ensure that every community benefits from the clean energy transition. This funding supports targets outlined in Executive Order 14017, “America’s Supply Chains,” and the Federal Consortium for Advanced Batteries’ National Blueprint for Lithium Batteries, with a vision to establish a strong domestic battery supply chain and a secure, equitable domestic industrial base by 2030.

The DOE is also making up to $10bn in loan authority available for applications under the Advanced Technology Vehicles Manufacturing Loan Program. These loans are intended for automotive manufacturing conversion projects that retain high-quality jobs in communities with existing manufacturing facilities.

The DOE’s intent to invest approximately $3.5bn aims to enhance the production of advanced batteries and battery materials critical to clean energy industries. This includes electric vehicles and energy storage. The programme will prioritise communities with experienced auto workers, strong workforce practices, and plans to create high-quality jobs.