WASHINGTON, July 9 (Reuters) - The U.S. Department of Energy's loans office said on Tuesday it issued a conditional loan of up to $1.2 billion to ENTEK Lithium Separators LLC to finance a plant in Indiana for making lithium-ion battery separators used mostly in electric vehicles.

Battery separators play a key role in the performance and safety of lithium-ion batteries.

Based on current factors chosen by battery cell manufacturers, the project will support roughly 1.9 million mid-size EVs or 1.3 million electric sports utility vehicles, ENTEK said in a release. The project, in Terre Haute, Indiana is expected to create more than 760 construction jobs and 635 operational jobs, it said.

"There has never been a more exciting time to be a manufacturer in the battery industry," ENTEK CEO Larry Keith said.

If finalized, the loan would be offered through the Advanced Technology Vehicles Manufacturing Loan Program that has $40 billion in direct lending authority.

Separators produced at the plant will accommodate all existing lithium-ion EV battery chemistries, the LPO said.

Automakers face increasingly stringent requirements in order to qualify for $7,500 EV tax credits. New rules took effect on Jan. 1 restricting Chinese content in batteries eligible for EV tax credits of up to $7,500, which sharply cut the number of eligible vehicles. Automakers have since made changes to supply chains and won restored eligibility for many vehicles.

DOE estimates that by 2030, the North American lithium-ion EV battery industry will require annual separator production of 7 to 10 billion square meters. DOE estimates the project will support roughly 1.9 million mid-size EVs or 1.3 million electric SUVs.

It is unclear when the loan will be finalized.

In June 2023, DOE said it intended to loan the Blue Oval SK joint venture of Ford Motor (F.N) New Tab, opens new tab and South Korean battery maker SK On, a unit of SK Innovation (096770.KS) New Tab, opens new tab, up to $9.2 billion to help finance construction of three new battery manufacturing plants in Tennessee and Kentucky. The loan for the Ford SK joint venture has still not closed.

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https://www.reuters.com/business/autos-transportation/entek-gets-conditional-12-billion-us-loan-ev-battery-separator-plant-2024-07-09/