Ford Motor Co. will use nearly $400 million in Energy Department loans to boost the fuel economy of one of its most popular sport utility vehicles.
The Dearborn, Mich., automaker announced today that it will use the cash to revamp a Chicago assembly plant to produce the next-generation Ford Explorer, which the company expects will get at least 25 percent better gas mileage over current models. According to U.S. EPA, a two-wheel-drive 2010 Explorer gets 15 miles per gallon in the city and 21 mpg on the highway.
Company executives said production of the new Explorer will begin in the fourth quarter of this year and will require the addition of 1,200 new employees at the Chicago facility.
"This investment underscores Ford's commitment to building world-class, fuel-efficient vehicles in America and creating new jobs that will contribute to our nation's economic recovery," said Mark Fields, Ford's president of the Americas.
The DOE cash is part of a $25 billion loan program created by the 2007 energy law to help the auto industry retool U.S. factories to produce more fuel-efficient cars and trucks to meet new federal fuel economy standards.
Ford was awarded $5.9 billion from the program last summer, the largest total of the five companies that have so far received loans through the program. Counting the Chicago retooling, Ford will use the DOE funding to revamp 11 domestic facilities.
The Chicago investment will allow Ford to shift Explorer production from its plant in Louisville, Ky., to Chicago, so the Kentucky plant can be retooled to produce smaller, more fuel-efficient cars beginning next year, Ford said.
In addition to benefiting from the low-interest federal loans, Ford will capitalize on a new Illinois state incentive program that provides tax breaks to businesses that commit to creating or retaining jobs in the state. Ford officials said they worked closely with Illinois Gov. Pat Quinn (D) to rewrite the rules to allow the automaker to receive payroll tax credits rather than corporate income tax breaks.
Ford has sold more than 6 million Explorers since the vehicle was launched in 1990. The model has been the best-selling mid-size SUV for 15 of the past 19 years. Explorer sales dropped 33 percent last year, to slightly more than 50,000.