U.S. will offer $12B to automakers and suppliers for the advancement of new energy vehicles

U.S. Secretary of Energy, Jennifer Granholm held a briefing with journalists Thursday where the former governor announced the United States will be making $12 billion in funds available through grants and loans to automakers and their suppliers for the purpose of retrofitting facilities to produce electric and other advanced vehicles.

The funding will include $10B from a federal loan program for clean vehicles and aims to support projects within well-established automotive manufacturing areas, aimed at preserving jobs and supporting the workforce, she said.

Out of the funding allocated for advanced vehicles, $2B will be sourced from the Inflation Reduction Act, a legislation passed by the Democrats last year, Granholm said.

The Biden administration will also offer $3.5B in funding to domestic battery manufacturers.

The announcement comes amid tense negotiations between the United Auto Workers union and the big three auto companies over wages, benefits for workers making electric vehicle batteries. However, Granholm stated that she does not know if the funding will have any effect on negotiations.

The UAW has previously warned that a swift transformation could potentially jeopardize numerous jobs, particularly in states like Michigan, Ohio, Illinois, and Indiana. Shawn Fain, the President of UAW, has actively advocated for the preservation of a Jeep factory situated in Belvidere, Illinois, which Stellantis (NYSE:) intends to shut down. Stellantis has left open the possibility that the factory could continue its work with government aid.

Besides electric vehicles, the funding has the potential to cover factories engaged in producing efficient hybrids, plug-in electric hybrids, plug-in electric drive vehicles, as well as hydrogen fuel cell vehicles, the department said.