Fuelling Domestic Magnet Production to Meet Rising Demand for Electric Vehicles in the US
E-VAC Magnets, the North American subsidiary of Vacuumschmelze (VAC), is constructing a permanent magnets manufacturing facility in South Carolina to help boost US supply of EV infrastructure. Societe Generale acted as Mandated Lead Arranger and Hedge Provider in the $335m Project Financing for this first of its kind permanent magnets manufacturing plant in the United States.
In the United States and worldwide, electric vehicle (EV) sales are rising rapidly. Researchers expect passenger EV sales to exceed 30 million in 2027 and grow to 73 million per year in 2040. Within the US, General Motors is one of the biggest drivers of EV growth, registering a 60% year-over-year increase in EV sales in Q3 2024, with Q3 sales also up 46% compared to Q2 2024.
Dependency on imported permanent magnets
EV manufacturing is largely dependent on the production of permanent magnets which use rare earth metals to enable high-powered and energy efficient electric motors. However, current EV supply chains are heavily reliant on products imported from China. In fact, China captures roughly 90% of permanent magnet production as of 2022 according to the US Department of Commerce.
To meet US demand for EVs, many manufacturers are seeking to diversify their supply chains and establish facilities in North America.
A first of its kind in the US
E-VAC Magnets, the North American subsidiary of Vacuumschmelze (VAC), is constructing a permanent magnets manufacturing facility in South Carolina to help boost US supply of EV infrastructure. The facility aims to produce 1,600tpa of magnets which has the potential to enable the development of hundreds of thousands of EV motors for General Motors vehicles within North America.
Societe Generale financed a $335 million deal to support construction of E-VAC’s manufacturing facility. The project financing is underpinned by a 10-year agreement with General Motors, in which the company is responsible for rare earth supply for the facility.
The deal is the latest example of Societe Generale’s commitment to funding the technology necessary to advance the global green energy transition while supporting the decarbonization of the transportation industry around the world. Earlier this year, the bank financed a €75 million Green Loan deal for Electra to advance EV charging infrastructure across Europe.
VAC is owned by Ara Partners, a global private equity firm based in Houston, Texas which specializes in industrial decarbonization investments. VAC is Europe's only permanent magnet producer of scale and operates manufacturing facilities around the globe.
Tuan Tran, a Partner at Ara, said, “We’re thrilled to have partnered with Societe Generale on the Vac financing. It’s a fantastic showcase of what Societe Generale and Ara can do together. Their team was fantastic to work with and we’re looking forward to working with them on the next one.”
“Partnering with leaders in decarbonization such as Ara Partners and VAC is part of Societe Generale’s strategy of financing and investing in emerging leaders, nature-based solutions, and impact-driven opportunities, the key enablers of the shift from brown to green economies,” said Layal Nabhan, Societe Generale’s Head of Sustainability - Financial Institutions Group.
The project financing for E-VAC is a first for Societe Generale and the first of its kind in the US.
“This transaction paves the way for the United States to mature its domestic magnet manufacturing industry and support the increased production of EVs in the US,” said William Turlington, Head of Battery, Mining and Industries Financing and Advisory, at Societe Generale Americas. “It also strengthens our ties to both VAC and Ara Partners, major players in the EV production industry. We look forward to following the progress of the facility over the next two years.”
Construction of the facility is expected to be completed by Q2 of 2026.