White House Touts $1 Billion Fund To Help Suppliers Retool For EVs

Photo: Reuters/Andrew Kelly

WASHINGTON, DC (REUTERS) – Investment firm Monroe Capital LLC said on September 23 it plans to launch a fresh fund of up to $1 billion to provide loans for smaller auto suppliers as the industry shifts from gasoline-powered to electric vehicles.

The White House said the fund would “facilitate access to lower cost capital for small- and medium-sized auto manufacturers to refinance, grow, and diversify their businesses” and noted that more than 250,000 people across the United States work for small- and medium-sized auto suppliers.

The Drive Forward Fund LP is expected to be backed by low-cost government-guaranteed lending through a U.S. Small Business Administration license for the fund.

Also the. Treasury Department announced a $9.1 million grant to launch the Michigan Auto Supplier Transition Program to help smaller firms secure financing for EV components’ production.

New government tariffs on Chinese EVs and on batteries, components and critical minerals along with restrictive EV tax credit rules are prodding automakers to shift their supply chains. Automakers face stringent new emissions rules that are also pushing them to build cleaner vehicles requiring new parts.

Chicago-based Monroe said unlike larger manufacturers, small- and medium-sized auto suppliers often lack access to finances, hindering their ability to expand to produce parts for EVs.

The fund, which will be advised by an auto industry council, intends to begin fundraising after completing the SBA Small Business Investment Company licensing process, Monroe said.

In July, the Energy Department said it planned to award GM and Chrysler-parent Stellantis nearly $1.1 billion in grants to convert existing plants to build electric vehicles and components and last week announced $3 billion for battery manufacturing sector grants for 25 projects.