The Biden administration revealed Thursday it will make available more than $15 billion for automakers to retrofit existing manufacturing plants for gas-powered vehicles to instead make cars and trucks that run on electric.
The move comes amid heightened tensions between President Biden and the auto industry, including automakers and the United Auto Workers. The companies fear that a too-rapid clean-energy transition could hurt their bottom line while the unions fear the loss of thousands of blue-collar union jobs.
“This funding will help existing workers keep their jobs and have the first shot to fill new good jobs as the car industry transforms for future generations,” Mr. Biden said in a statement.
The Department of Energy will provide $2 billion in grants and up to $10 billion in loans to repurpose factories for EVs.
The $2 billion in grants, provided under Democrats’ tax-and-climate spending law known as the Inflation Reduction Act, will be prioritized for facilities that retain collective bargaining agreements 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 $10 billion in loans will come from DOE’s Loans Program Office.
DOE is seeking to also wean the U.S. off foreign dependency for the minerals and other materials used in EV manufacturing by offering an additional $3.5 billion in funding from the 2021 Bipartisan Infrastructure Law to convert plants to manufacture batteries used in EVs and the nation’s power grid.
“While we transition to EVs, we want to ensure that workers can transition in place, that there is no worker, no community left behind,” Energy Secretary Jennifer Granholm told reporters.
She conceded that she was unaware whether the new funding “will have an impact on the collective bargaining” in the wake of UAW members at the big three Detroit automakers voting last week to go on strike unless a wages and pensions deal is reached before their contract expires in two weeks.
Nearly all — 97% — of the UAW’s 150,000 members with General Motors, Ford and Stellantis, which owns Chrysler, voted to authorize the strike.
The UAW did not respond to a request for comment about the new EV funding.
Rep. Dan Kildee, a Michigan Democrat whose district borders Detroit, said he was satisfied with the administration’s action and said it would protect union jobs.
“Today’s announcement shows that the Biden administration is committed to creating good-paying union jobs here, not China,” he said. “For over a century, Michigan has led the way in automotive manufacturing because of its highly skilled union workers. With these new efforts, Michigan will continue to lead the way and put the world on wheels.”
To force a more rapid EV transition, the Biden administration is proposing such stringent tailpipe emissions rules that automakers would be forced to sell predominantly EVs rather than gas-powered cars by 2030.
The rules have not yet been finalized as automakers, energy analysts and other critics say the timeline is unrealistic.