Dive Brief:
- The Biden-Harris administration is working with asset management firm Monroe Capital to create a $1 billion fund for small- and medium-sized auto manufacturers and suppliers, the firm announced earlier this week.
- The “White House inspired” fund, supported by MEMA, The Vehicle Suppliers Association and Alliance for Automotive Innovation and launched by Monroe Capital, will focus on makers of powertrain, body, drivetrain, chassis, interiors and electrical components, as well as complementary software-as-a-service providers, according to the investment firm.
- The money comes as the administration continues its push to bring more funding to automakers and suppliers transitioning to electrification.
Dive Insight:
The “Drive Forward” fund particularly aims to help companies make investments in new technologies, including in making the switch from internal combustion production to electric vehicles. It will also offer funding for investments in smart factories, autonomous driving systems and other connected technologies.
Such priorities put a premium on helping the country's end-to-end auto supply chain transition to EV production, an endeavor that has proven more expensive than anticipated for many companies.
The Biden-Harris administration has poured billions of dollars into this endeavor in a bid to ease the capital expense of the transition. In September 2023, the Department of Energy unveiled $15.5 billion in funding and loans to help automakers transition to EV production.
And just last week, the administration announced $3 billion in funding for battery manufacturers, another arm of the domestic EV industry it's trying to grow.
"Automakers are investing billions in this transition and building electrified vehicles in all makes and models, but you’ve got to remember the automotive supply chain is made up of hundreds of companies – many small and medium-sized businesses – that have been churning out components and parts for generations, support communities across the country," John Bozzella, president and CEO of the Alliance for Automotive Innovation, said in a statement.
As part of the initiative, Monroe Capital plans to apply for a Small Business Administration Small Business Investment Company license, which will allow the firm to offer companies low-cost, government guaranteed-leverage. Fundraising will begin following the licensing process, the firm said.
