Michigan Auto Parts Makers Get More Than $100 Million In New Funding From Feds

Vice President Kamala Harris this week announced more than $100 million in new funding opportunities earmarked for the country’s small businesses that manufacture vehicle parts.

Much of the funding will stem from two programs within the Department of Energy. The Industrial Assessments Center Implementation Grants Program will allocate $50 million for auto suppliers to start expanding their manufacturing pipelines so they can focus on converting the parts they currently make to those more commonly found in EV supply chains.

The star in EVs is lithium-ion batteries and their components, some of which have been in short supply in the past and face similar threats in the future with increased demand. Larger suppliers usually shoulder the production of battery cells and other key parts, like brakes and motors — these are usually made by the tier 1 suppliers. Smaller parts makers often fall under the category of tier 3 suppliers, generally subcontracting to larger companies within the supply chain.

A parts supplier could receive a grant of up to $300,000 under the program.

Meanwhile, the Automotive Conversion Grants Program will allocate another $50 million toward state and small supplier partnerships. The effort aims to help small suppliers move away from making parts for internal combustion engines and start transitioning to making parts for EV supply chains.

“This funding will maintain the Domestic Conversion Grant’s same focus on supporting retooling to keep good, good-paying and union jobs in the same communities as automakers and auto suppliers transition to electric vehicle manufacturing here in America,” the White House fact sheet reads.

The Small Business Administration is also getting involved. Not only will the SBA turn to its network of small-business investment companies in an effort to drum up private investment for EV supply chains, it’s also propping up a new working capital pilot program within its 7(a) lending program. Details for the pilot are relatively sparse, but it looks to help entrepreneurs — including those making and distributing automobile parts — secure lines of credit.

Monday’s funding announcement arrives as the U.S. auto market fights to recover from a pandemic-era slump marked by chip and vehicle shortages. Though sales have rebounded, EV sales have dipped in recent months. Outlook for the U.S. auto market is mixed. Though Cox Automotive, a digital marketing and other automotive services provider, is generally optimistic, with visions of new vehicle inventories on the rise in the U.S., paired with moderate price declines.

Still, countering China’s dominance may be tough. “China will also account for around half of global EV exports as its sales to developed markets expand,” the Economist Intelligence Group predicts in its automotive outlook report. “Japanese, European and US automakers will respond by pushing for higher trade barriers and government subsidies.”