Automakers are selling bonds to help finance sought-after electric vehicles.
This week, Ford Motor announced it is issuing green bonds. The bonds raise funds for new and existing projects that deliver environmental benefits, and a more sustainable economy. The company is issuing eco-friendly bonds for electric vehicles.
“Ford intends to allocate an amount equal to the net proceeds from this offering to finance or refinance, in whole or in part, new or existing green projects, assets, or activities that meet the eligibility criteria,” reads part of the offering document.
Projects eligible for the bonds include most things related to clean transportation, such as EV research and development as well as manufacturing facilities that can produce batteries for electric vehicles.
Why it’s news
Ford has many projects it can allocate the green funds to, the company has been setting major goals on EV production. The Michigan-based car company plans to invest more than $50 billion in EVs through 2026. It also plans for more than half its global production to be EVs by 2030.
In September 2021, Ford announced its plan to build a mega campus in Tennessee and twin battery plants in Kentucky. Ford said the plants will bring zero-emission vehicles at scale to American customers with the largest, most-advanced, and most-efficient auto production complex in the company’s history.
Companies issue green bonds because they end up paying lower rates for the equivalent non-green bond. Exactly what Ford will pay and how much it will borrow aren’t known yet. The offering will be updated as the company’s agents gather indications of interest from bond managers, says Barron’s.