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First round of DOE loans go to Ford, Nissan, Tesla
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Ford Motor Co., Nissan North America and Tesla Motors Inc. will receive a combined $8 billion in Energy Department loans to help make more fuel-efficient cars and trucks, the Obama administration announced today.
Energy Secretary Steven Chu made the announcement at Ford's Research and Innovation Center in Dearborn, Mich., calling the program a "personal victory" for President Obama and his "new energy strategy for America."
"The most fuel-efficient cars in the world must be made here in America," Chu said. "This is not a talking point for this administration, it is a genuine commitment."
The loans are the first to be awarded from a $25 billion program designed to help automakers meet new fuel economy and emissions standards and are separate from both the federal bailout of General Motors Corp. and Chrysler LLC, and the $787 billion stimulus package.
Ford, the only member of Detroit's Big Three not surviving on federal aid, was awarded the largest share of the government cash. The company will receive $5.9 billion to help finance engineering advances to both traditional internal-combustion engines and electrified cars and trucks. The loans will also help Ford convert existing truck plants to produce cars and to retool plants in five states to increase the fuel efficiency of the company's fleet.
Nissan will receive $1.6 billion to make electric cars and battery packs at its manufacturing complex in Smyrna, Tenn. The loans will help build a new battery plant and retool an existing assembly plant. The Japanese automaker is currently developing an all-electric car that it hopes to bring to market in late 2010. Production of the car will initially be in Japan, but the company has said they eventually want to move some production to its Tennessee plant.
California-based Tesla Motors will get $465 million to help produce its Model S, an electric sedan that is expected to be roughly $50,000 cheaper than the company's first vehicle, the two-door Roadster which costs roughly $100,000. Tesla aims to begin selling the Model S in 2011 and ramp up production to 20,000 vehicles per year by the end of 2013.
Federal cash will be delivered in progressive payments as needed for approved projects and not as a lump sum. For example, Ford will receive the money through 2011.
Congress created the "advanced technology vehicles manufacturing" program in the 2007 energy bill, but lawmakers did not provide the funding to back the loans until last fall when Detroit executives came to Washington, D.C., pleading for federal aid. DOE then scrambled to write the rulemaking that would govern the loan program in an effort to speed the funds to the cash-strapped industry.
More than 75 companies submitted applications, totaling roughly $38 billion, during the first loan window. Chu said today more loans are expected to be awarded in the coming months and left the door open for General Motors Corp. and Chrysler LLC to receive a portion of the federal cash.
GM and Chrysler were hoping to receive roughly $10 billion and $6 billion, respectively, from the program, but neither company met the viability threshold required to be eligible for the DOE cash. Chu said DOE began reviewing Chrysler application the day they emerged from bankruptcy and has already begin to review the technical side of the GM applications.
While he said no money had been directly earmarked for the two carmakers in which the U.S. government holds ownership stakes, he suggested DOE would like to see both get cash as part of future rounds of the DOE program.
"There is money there, I wouldn't say set aside," Chu said when asked about the status of GM and Chrysler's applications. "But let's just say we are trying to stretch those dollars as far as we can."
Democratic Sen. Debbie Stabenow, who was one of a number of Michigan officials for the event, pointed out that the total DOE pot could likely grow in the future. The sweeping energy and climate bill that is snaking through the House would double the program to $50 billion.
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