By David Shepardson
WASHINGTON (Reuters) – Investment firm Monroe Capital LLC said on Monday it plans to launch a new fund of up to $1 billion to make loans to smaller auto suppliers as the industry shifts from gasoline-powered to electric vehicles.
The White House said the fund would “facilitate access to lower-cost capital for small and medium-sized automakers to refinance, grow and diversify their businesses” and noted that more than 250,000 people in the United States work for small- and medium-sized automakers work. small car suppliers.
The Drive Forward Fund LP is expected to be backed by low-cost, government-guaranteed loans through a U.S. Small Business Administration license for the fund.
Also Monday, the U.S. Treasury Department announced a $9.1 million grant to launch the Michigan Auto Supplier Transition Program to help smaller companies secure financing for EV component manufacturing.
New U.S. government tariffs on Chinese electric vehicles and on batteries, components and critical minerals, along with restrictive tax credit rules, are spurring automakers to shift their supply chains. Automakers are facing tough new emissions rules that are also pushing them to build cleaner vehicles that require new parts.
“We believe this new Drive Forward Fund will be critical to catalyzing growth and innovation within the U.S. automotive supply chain,” said Ted Koenig, CEO of Monroe.
Chicago-based Monroe said that unlike larger manufacturers, small and medium-sized auto suppliers often lack access to finance, which hinders their ability to expand into the production of electric vehicle parts.
The fund, which will be advised by an auto industry board, plans to begin fundraising after completing the SBA Small Business Investment Company licensing process, Monroe said.
Alliance for Automotive Innovation CEO John Bozzella, head of the industry association representing General Motors, Toyota Motor, Volkswagen and other automakers, said the fund would ensure smaller suppliers can access private money to modernize.
A successful EV transformation “requires an advanced automotive supply chain that keeps the country competitive and supports our economic and national security,” Bozzella said.
In July, the Energy Department said it planned to award GM and Chrysler parent company Stellantis nearly $1.1 billion in grants to convert existing factories to build electric vehicles and parts, and last week it announced $3 billion for subsidies for the battery production sector for 25 projects.
U.S. Vice President Kamala Harris announced in May that the government would allocate more than $100 million to expand or retool small and medium-sized auto parts manufacturers.
(Reporting by David Shepardson; Editing by Sherry Jacob-Phillips)