Ford Motor stock rose Thursday after the federal government committed billions to help the Detroit automotive giant transition to electric vehicles.
On Thursday, the U.S. Energy Department announced a $9.2 billion conditional loan commitment for BlueOval SK LLC. That is the battery manufacturing joint venture between Ford and SK On, the South Korea-based EV battery maker that was spun out of SK Innovation (096770.Korea).
The...
Ford is getting a sizable loan from the government to help fund its EV transition.
Courtesy Ford
Ford Motor stock rose Thursday after the federal government committed billions to help the Detroit automotive giant transition to electric vehicles.
On Thursday, the U.S. Energy Department announced a $9.2 billion conditional loan commitment for BlueOval SK LLC. That is the battery manufacturing joint venture between Ford and SK On, the South Korea-based EV battery maker that was spun out of SK Innovation (096770.Korea).
The JV is building one plant in Tennessee and two in Kentucky that will eventually produce 120 gigawatt hours of EV batteries for Ford vehicles, enough to power up to 1.5 million new EVs a year.
A single battery plant can cost up to $3 billion. Ford’s total planned spending, along with SK contributions, on the Kentucky and Tennessee plants is slated to hit more than $11 billion, making the loan is a significant source of capital.
That’s one reason Ford stock jumped in reaction to the news. Shares gained about a quarter after the announcement. The stock is up 17 cents, or 1.3%, in midday trading while the S&P 500 is up 0.2% and the Dow Jones Industrial Average is flat.
“Ford welcomes the Department of Energy’s support for BlueOval SK’s EV battery production,” Ford Treasurer Dave Webb said in an emailed statement. “It’s going to help make great EVs available to more customers while powering thousands of good paying jobs and American manufacturing.”
The loan is part of the Advanced Technology Vehicles Manufacturing Loan Program authorized by the Energy Independence and Security Act of 2007. That program has lent about $8 billion so far, which suggests the BlueOval loan would be its largest to date.
But EVs are moving mainstream. All-battery electric vehicles accounted for roughly 7.5% of all new car sales in the U.S. in the first quarter.
Ford is all-in on its EV transformation. The company reorganized itself in 2022 and now reports results for its EV division called Model e. Ford plans to be selling EVs at a “run-rate” of 2 million a year globally by 2026. The automaker sold about 12,000 electrified vehicles in the first quarter of 2023.
Write to Al Root at allen.root@dowjones.com