Aluminum Cars Get Government Backing With $269M Department Of Energy Loan To Alcoa

The U.S. federal government is investing $269 million to expand the country’s supply of aluminum for the automotive industry. The Department of Energy announced Thursday that the low-cost federal loan will cover the bulk of costs for converting a Tennessee soda can factory owned by metal giant Alcoa Inc. into a maker of high-grade aluminum.

The money comes from the 7-year-old Advanced Technology Vehicles Manufacturing (ATVM) loan program, which aims to promote innovation in energy-efficient vehicles. The initiative has been inactive since 2011 as U.S. auto sales improved.

Last year, Energy Secretary Ernest Moniz announced he was shifting emphasis of the program toward auto industry suppliers, and Alcoa is the first since then to have its loan application approved.

“Alcoa’s innovative, high-strength aluminum solutions are leading the light weighting revolution now happening in the automotive industry,” Klaus Kleinfeld, Alcoa chairman and chief executive officer, said in a statement announcing news of the loan approval. The $269 million covers most of the $275 million expansion project at Alcoa’s 100-year-old 200-acre facility, located about 15 miles south of Knoxville, Tennessee.

Aluminum has been used to make cars for as long as they’ve been around, especially for weight-conscious sports racers. But the metal recently has become a key ingredient in the auto industry’s efforts to improve fuel economy of the cars they produce.

Aluminum increasingly is used to build bigger cars, like frame components in the 2016 Volvo XC90 crossover, hood panels in the upcoming 2016 Lexus RX 350 crossover, or for entire vehicle bodies, like the 2015 Ford F-150 pickup truck.

The ATVM program gave out more than $8 billion in loans to the industry, largely comprising a $5.91 billion loan to Ford Motor Company to upgrade 13 of its factories to produce the company’s more energy-efficient EcoBoost engines and to introduce hybrids and plug-in hybrids. Nissan North America received the second-largest ATVM loan, of $1.45 billion, in part to develop the Nissan Leaf electric powertrain. Tesla Motors received a $465 million loan in 2010 but paid the money back nine years early, in 2013.