The US Department of Energy’s (DOE) Loan Programs Office (LPO) announced a conditional commitment to American Battery Solutions (ABS) for a $165.9-million loan to help finance the expansion of an advanced battery pack assembly facility to support light-, medium- and heavy-duty electric vehicle (EV) and industrial equipment applications at its Springboro, Ohio, and Lake Orion, Michigan, facilities.

If finalized, the loan will help enable ABS’s production of approximately 4.2 GWh of lithium-ion battery packs annually at full capacity by 2026.

In 2023, ABS was acquired by Komatsu, a Japan-based leader in construction, mining, forestry, and industrial heavy equipment. The acquisition of ABS will enable Komatsu to develop and produce its own battery-operated construction and mining equipment, through the integration of ABS’ battery technology with Komatsu’s knowledge and network.

Komatsu said that the first equipment produced with ABS’ batteries will be used to power mining equipment in North and South America, where demand for electrification has been increasing. In the future, Komatsu will aim to expand the use of batteries in construction equipment and to establish a global supply system.

ABS is seeking to expand its lithium-ion battery pack assembly capacity to capitalize on rapidly growing demand from the EV market, which saw unprecedented progress in 2023. The project will finance the construction of four high-voltage (HV) and four low-voltage (LV) battery pack assembly lines in Springboro, Ohio. ABS will also upgrade its existing battery cell testing and quality control equipment at its existing facility in Lake Orion, Michigan.

The project will support ABS’s goal of delivering standardized and customized battery packs for various EV and other battery market segments, including smaller or lower-volume markets, such as startups, or medium- and heavy-duty vehicle manufacturers, such as the makers of electric delivery vans, trucks, and buses. Applications in HV market segments include electrified fleet and commercial vehicles, and other EV applications; while LV market segments include industrial applications like low-speed electric vehicles and industrial equipment, as well as auxiliary batteries for EVs. ABS has existing customers and offtake agreements in both market segments.

Battery packs are an integrated system consisting of many components including cells, battery management, safety systems, and enclosures. Since ABS procures cells from third parties, ABS can remain adaptable and responsive to advancements in battery chemistry cost and performance. For example, if a new or improved chemistry comes to market, ABS can begin to acquire that type of cell and pass on improvements to its customers. This enables ABS to focus on the other critical steps in the manufacturing process—such as design, assembly, and integration. ABS has existing agreements for supply of essential components, including the lithium-ion battery cells, that it then assembles. DOE performs rigorous due diligence related to all aspects of a potential deal, including supply agreements, for all projects.

The announcement is a conditional commitment issued under the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. Through the ATVM program, LPO finances US manufacturing of advanced technology vehicles, qualifying components, and materials that improve fuel economy.

While this conditional commitment demonstrates the Department’s intent to finance the project, several steps remain for the project to reach critical milestones, and certain technical, legal, environmental, and financial conditions must be satisfied before the Department issues a final loan.