Biden administration awards car factories $1.7 billion so they can build EVs

The money will help retain current employees despite the shift to EV production.

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The US Energy Department has revealed that it's awarding car and auto parts factories in eight states a total of $1.7 billion in funding, so that they can be retooled to build electric vehicles and their components. According to The New York Times and The Washington Post, the money will come from President Biden's Inflation Reduction Act, which provides subsidies to EV and battery plants, as well as the $7,500 tax credits consumers can get if they buy an electric vehicle.

One of the 11 recipients is a Jeep factory in Belvidere, Illinois that closed last year. The $334.8 million it will get from the initiative will allow it to reopen to produce electric vehicles and restore 1,450 jobs. GM, which will be awarded $500 million, will convert a plant in Lansing, Michigan to produce EVs instead of gasoline cars. The US subsidiary of Korean auto parts maker Hyundai Mobis will also get $32.6 million to refit a plant in Toledo, Ohio for the production of plug-in vehicle components.

Government officials said they chose communities that are disproportionately affected by pollution or lack of investment. In addition, employees in all of the selected companies are represented by unions. The grants aren't set in stone — the companies still have to negotiate terms with the Department of Energy. They have to commit to retaining their current workers despite the shift to EVs, and they have to meet employment targets. The companies also have to promise to provide their workers with certain benefits, such as child care, pensions and training to further their careers.

As The Times notes, several factories selected for the initiative are located in "battleground states" for the upcoming presidential elections. "This investment will create thousands of good-paying, union manufacturing jobs and retain even more — from Lansing, Michigan to Fort Valley, Georgia — by helping auto companies retool, reboot and rehire in the same factories and communities," Biden said in a statement. "This delivers on my commitment to never give up on the manufacturing communities and workers that were left behind by my predecessor."

Jennifer Granholm, the US Energy secretary, believes the fund will retain 15,000 jobs and create 3,000 new ones. Granholm also said that it will help the US "compete with other countries who were subsidizing their auto industries." While the secretary didn't mention China specifically, the country is known for subsidizing its EV manufacturers. Earlier this year, the US government quadrupled import tariff for Chinese EVs, while the European Union announced that it was going to impose additional tariffs of up to 38 percent on Chinese-made electric vehicles to protect local manufacturers.