Austin American-Statesman: EV industry supplier could get a $362 million loan to help build its Georgetown facility

CelLink, a manufacturing company that supplies the electric vehicle industry, has been given a conditional commitment from the Department of Energy for a $362 million loan designed to help the company build out its planned $130 million facility in Georgetown. 

The California-based company was originally founded to develop a new type of wiring for solar panels, but it has been focused on developing technology for electric vehicles since 2019. The company makes electrically and thermally conductive flexible circuits, primarily used in automotive and energy storage industries, including products used in hundreds of thousands of electric vehicles already on the road.

CelLink broke ground on the Georgetown manufacturing facility last year, which is expected to be 294,297 square feet, and is located in Gateway35 Commerce Center, a new project near Interstate 35 and Texas 130. The facility is still under construction and on track to make its first commercial shipments in July.

What is a conditional loan?

The loan, if ultimately approved, would be offered through the Energy Department’s Advanced Technology vehicle manufacturing program, which is designed to fund a broad supply chain of companies that make building next generation vehicles such as electric vehicles and hydrogen-fueled vehicles possible. The department's loan program director, Jigar Shah, said the program has been used to aid such companies as Tesla and GM in the past.

“It's the Department of Energy's job and the advanced technology vehicle manufacturing programs' job to support innovation, and to support consumer choice,” Shah said. 

A conditional agreement like the one CelLink received is a difficult and crucial step towards receiving a loan from the Energy Department and represents a term sheet that has been approved by the department and partners in the federal government. The actual loan documents follow a conditional agreement and will have to close before the funds are dispersed.

CelLink will still have to meet certain goals outlined in its conditional agreement before a loan is received. The exact terms of the conditional load agreement were not available, and Shah said each applicant has a different set of requirements, in term sheets that can be dozens of pages long. The exact timing of a loan after a conditional commitment can vary and take anywhere from weeks to almost a year.  

If approved the loan would come on top of tax incentive deals the company received from both the city of Georgetown and Williamson County worth a combined $8 million.

What are CelLink's plans for Georgetown?

The Energy Department announcement said the Georgetown facility would have about 1,200 employees, which is in line with documents filed with Georgetown previously saying CelLink planned to hire between 800 and 2,000 workers over the next 10 years.

The facility will produce CelLink's "flex harnesses," a lighter, more efficient flexible circuit wiring harnesses for the automotive industry and other customers. Wiring harnesses are a set of wires and related equipment that are a key component in cars, carrying electricity throughout the vehicle, including electricity that relays information.

Once fully operational, the Georgetown facility is estimated to be able to produce enough flex harnesses for about 2.7 million electric vehicles a year. The product also can be used gasoline-powered vehicles to reduce their weight, saving gas.

Kevin Coakley, co-founder and CEO of CelLink Corporation, said the loan will give the company a financial cushion to make it through the construction and ramping up of the new factory without taking a significant portion of the company's existing cash. The new facility's size will not change, and the company still plans to scale up additional manufacturing lines in step with demand.

In a statement, Coakley said the loan would allow the company to meet rising demand for its products from major electric vehicle manufacturers. Coakley added the loan comes as public markets are struggling and private investment dollars are hard to come by.

"The (Energy Department) financing gives us the opportunity to cost-effectively scale up our technology from two lines in California to 25 lines in Texas," Coakley said. "It allows us to meet all of our existing customer demand and yet still have some extra capacity to ramp up new products for new and existing customers. It means CelLink will be an EV component supplier that (original equipment manufacturers) can count on for the long haul."

Shah said the conditional commitment comes amid unprecedented demand for electric vehicles in the United States.

“We're doing our part to make sure that we can onshore and restore the supply chain here in the United States to make sure that we scale up to meet the consumer," Shah said.

CelLink joins a growing number of companies related to the electric vehicle industry in the Austin area. This includes Tesla, which announced it was moving its headquarters to Austin in late 2021 to the site of its massive manufacturing facility here.