Electric vehicle supply chains in the Chattanooga area saw a jolt Wednesday when two companies building major production plants were selected for nearly $300 million in federal grant money.
Novonix, which began operation at a plant on Chattanooga's riverfront late last year to produce synthetic graphite for electric vehicle batteries, was picked by the U.S. Department of Energy to receive $150 million for a factory in the planning stages.
Also, Piedmont Lithium, which in August unveiled plans to build a nearly $600 million plant in Etowah, Tennessee, to make lithium hydroxide for batteries, was selected for a $141.7 million department grant.
The two are among the first projects funded by President Joe Biden's Bipartisan Infrastructure Law to expand domestic manufacturing of batteries for electric vehicles and the electrical grid, according to the Energy Department. The $1.2 trillion package passed in November 2021 with no support from Tennessee's Republican legislators.
Piedmont Lithium Chief Executive Keith Phillips said in a telephone interview the funds will accelerate the planned project in Etowah, which is believed to be the biggest-ever single investment in McMinn County.
"We have an ambitious timeline," said Phillips, whose company is to start work next year on the factory and hire 117 employees initially.
He said a key challenge is raising the capital for the project, and the grant "takes the financing risk off the table." Phillips said plans are to start producing the battery material in 2025.
He said a team from the North Carolina-based business is to arrive Thursday in McMinn County to start conversations with local schools and community colleges about developing employees with the needed talents.
"We've got a couple of years to train people. We'll be training up a lot of people locally," Phillips said.
Chris Burns, Novonix co-founder and chief executive, said the funding for the company that's already operating a facility in a former Alstom facility on Riverfront Parkway is "in recognition of our readiness to accelerate the domestic battery supply chain and meet growing global demand from the electric vehicle and stationary grid storage markets."
"We are excited to partner with the DOE to further our mission of establishing a domestic supply chain for synthetic graphite used in lithium-based batteries and creating long-term sustainable value for our stakeholders," he said in a statement.
Daniel Deas, president of the company's anode materials division, said in an interview earlier this month at the plant that the company is up to 81 employees so far at the 400,000-square-foot facility and expects to hit 100 workers by the end of the year.
Novonix is on track for reaching annual production capacity of 10,000 tons of synthetic graphite in 2023 at the Riverfront Parkway plant. Headquartered in Australia, Novonix plans to eventually invest about $160 million and employ 300 workers at the former Alstom turbine-manufacturing plant.
Deas said Novonix is looking at building another plant to produce 30,000 tons of synthetic graphite and employ 1,000 more workers. He said the company is eyeing a greenfield site rather than retrofitting an existing facility.
Deas said during a tour of the plant by U.S. Rep. Ro Khanna, D-Calif., that the Chattanooga area is in the running among locations for the future plant.
"We're fighting hard for it," Joda Thongnopnua, chief of staff for Chattanooga Mayor Tim Kelly, told Khanna at the time.
Piedmont and Novonix said in news releases that they've been invited to negotiate specific terms of the grants. Negotiations will cover conditions, including operational milestones, timing and schedule of payment of grant funds.
Along with Novonix and Piedmont, Microvast plans to build a separator facility in Tennessee intended to supply electric vehicle batteries in Clarksville and will receive a $200 million grant. Together, the grants to the three companies amount to about $500 million.
The 20 companies named Wednesday will receive a combined $2.8 billion to build and expand commercial-scale facilities in 12 states to extract and process lithium, graphite and other battery materials; manufacture components; and demonstrate new approaches -- including manufacturing components from recycled materials -- according to the Energy Department.