As the Bipartisan Infrastructure Reduction Act continues to spur and invest in America’s infrastructure – most especially, its many renewable and cleantech projects – the Advanced Technology Vehicles Manufacturing Loan Program (ATVM), best known in its early days for its massive 456 million dollar loan to Tesla, has been revived and has been loaning billions of dollars into projects related to domestic vehicle manufacturing, including medium and heavy duty efforts. VX News shares an excerpt from a recent LACI & Milken sponsored event, featuring Senior Advisor for DOE Arnab Pal speaking with ATVM Loan Program Manager, Chelsea Sexton. The conversation covered the logistics of building and supporting the future of advanced vehicle production, as well as both the pursuit of domestic security in manufacturing, and the many supply chain challenges in need of addressing.
I want to introduce you all to Chelsea Sexton, the director of the Advanced Technology Vehicle Manufacturing Loan Program. We're going to have a conversation about what we're doing nationally around manufacturing, onshoring, and reshoring, and what we can do to apply that here in California.
Chelsea Sexton
The Advanced Technology Vehicle Manufacturing Loan Program is one of several in our office, but it is the one that gets the bulk of our manufacturing projects. Nine of the 12 conditional commitments or loans we've made in the last couple years have been through this program, which has been entirely in the battery supply chain. It doesn't have to actually be vehicles, though this was the original trend, we were best known for having financed Nissan, Ford, Tesla Motors about a dozen years ago. We are going in the direction of where a lot of the supply chain interest is and getting a lot more interest from components and materials. For us, that includes things like critical materials processing for EV batteries and rare earth elements for e-motors. Those sorts of things still fall into the manufacturing bucket for the purposes of this program. We're seeing more of those things and activities that are necessarily in vehicle interest in terms of manufacturing, or loans, at least from our office for manufacturing.
We are also in the process of expanding five new categories into this program after 15 years of doing vehicles only. We added medium heavy duty on road vehicles late last year. Next year, we are adding aircraft, maritime, rail and hyperloop… That's an overview of how we play in the manufacturing space. We also have some other programs, including some non-transportation manufacturing. It's not only transportation, but it is where the majority of the interest has been.
Arnab Pal
I want to give people an idea of what the scale we're operating at …We're talking about $9 billion of manufacturing. You can think about how that transforms communities, and how it changes the capacity to build in this country. A lot of what we're doing here isn't just about emissions reductions, it's about re-centering how we build our economy here in the United States.
So, what can we do here in California? What did you learn from putting these deals together? What can California take from this as they try to build their own manufacturing sector?
Chelsea Sexton
We have the headline grabbers. Most of the loans we've done in the sector have actually been on the smaller end … To say out loud that your million-dollar loan is small [laughs], but for us that is on the smaller side. We’ve done multiples of those. One was a small company in Louisiana processing graphite, one in Nevada processing lithium, one for a California company to expand their manufacturing, of all things, wiring harnesses, but no one else in the country is doing it. We're onshoring and reshoring components and supply chain elements that just aren't otherwise happening here. Or maybe we need more capacity to reach the EV and energy goals that everybody has, whether it's the federal administration, California administration, or the rest of us that have just all been happy workers for decades. Those are the types of things we're standing up.
I think that missing middle piece, some of the smaller things, gets lost because everyone's thinking about better Gigafactories or car plants and not about just how much is needed, and how much can happen in industrial parks and warehouses. It doesn't all have to be major, but when it’s not a car plant in California, then suddenly we say we don’t have the manufacturing and we can't do it. We're missing so much by not including the rest of it.
There’s a variety of golden locks issues that we see as projects come to us, but that's certainly one of them, this thinking that it must be all or nothing. But at the same time, we get a lot that are too early and a lot that are too late. We try to figure out that middle ground, and make sure that you talk to us early enough to understand what we're looking for. Sometimes we're not even the right fit. But we can help you identify that, versus being midway through construction, and suddenly it's too late for us to finance. That’s often part of the balance as well.
Arnab Pal
Are there specific things that California could be looking at, especially considering we may not be able to attract a large battery plant for electric vehicles the way some other states can? Also considering that we have the marketplace for consumers, and we have the deep valley, are there specific things the state can focus on?
Chelsea Sexton
I think there is quite a bit that the state can help do. I think folks are overlooking California because they're struggling with site selection, and there are other states that are louder and prouder about trying to recruit. I think there's quite a bit of technical assistance required, and that all hands-on-deck are needed. We get a lot of folks who think they're immediately ready for senior debt. There's a huge tranche in the middle of financial support and technical assistance that's needed to help folks graduate through different programs and resources to get to the truly scaled stuff that we are great at doing. But we do struggle with some of the smaller and some of the stuff in the middle. That public-private and public-public partnership, which obviously is something you've heard various versions of today, but it continues into this space as well.
Arnab Pal
I think people think that you get the money, you build a plant, and jobs are created. Or that we automatically get national security by having minerals processed in America, and that all of it just sort of happens. It doesn't work out that way. What are one or two takeaways in terms of if Los Angeles, California … What should they keep in mind when making these pitches to attract and scale opportunities?
Chelsea Sexton
Our director loves to say that we are private sector led and government enabled. All the conversations we have across the country and around the world are about needs and interests and interesting technologies. We end up uncovering these rabbit holes around supply chain issues, and then we go chase them. The “charging” people said that they needed more charging with deployment, and that they were especially having a hard time getting their hands on liquid-cooled charging cables. They say there's three companies in the world that make them, it’s not that many, none of them are here, and it’s hard to get. Can you help with that? And we agree and call up all those companies and say we have money and need their help. Some of the companies don't need as much money as we tend to play with, which I found to be especially. A big charger plant is $40 million.
These kinds of things get overlooked, because for example, you are at the Gigafactory and you think that they have the technological prowess. EVs started here thirty years ago! We need to lean in and capitalize on that intel, on that workforce, on everything that’s here to help with that.
The other thing I'm seeing besides weird little blockages that we need to chase is that there's a lot of interest on the “front end” and the “raw materials”. And there's a lot of interest in the “back end” at least on transportation. There's not a lot to metal-cam plans, P-cam plans, electrolyte separators, all your nerdy things that go into a battery…
We have these pockets of vulnerability, because those sectors are not really being chased by anybody anywhere other than recognizing it. I'll talk to a car company, and they will say they’re worried about this and can't get their hands on enough of it to support the plans that they have. The same is true in the stationary battery side. Fundamentally, a lot of those materials are the same. There are those types of opportunities where its blue ocean that could be chased as well given all the expertise that resides here.