Ford, Nissan, Tesla Get Govt Loans To Build Fuel-Efficient Cars

DEARBORN, Mich. — Cultivating the next generation of fuel-efficient vehicles, the Obama administration said Tuesday it would lend $5.9 billion to Ford Motor Co. and about $2.1 billion to Nissan Motor Co. and Tesla Motors Inc. in a government-industry partnership to build green cars.

Energy Secretary Steven Chu said the three automakers would be the first beneficiaries of a $25 billion fund to develop fuel-efficient vehicles. The loans to Ford will help the company upgrade factories in Illinois, Kentucky, Michigan, Missouri and Ohio to produce 13 fuel-efficient vehicles.

Nissan will receive loans of $1.6 billion to retool its plant in Smyrna, Tenn., to build electric vehicles and construct a battery manufacturing plant. Tesla will get $465 million in loans to build electric vehicles and electric-drive powertrains in California.

The loans were designed to help auto manufacturers meet new fuel-efficiency standards of at least 35 mpg by 2020, a 40 percent increase over current standards.

"These loans will help the auto industry meet and even exceed the president's tough fuel standards," Chu said at Ford's Research and Innovation Center. "This means the most fuel-efficient cars in the world must be made right here in America."

Dozens of auto companies, suppliers and battery makers have requested $38 billion from the loan program, which was created last year to give car companies and suppliers low-interest loans to retool their facilities for green vehicles and components such as advanced batteries.

Ford had been seeking about $5 billion in loans by 2011 and a total of $11 billion from the program to invest $14 billion in advanced technologies over the next seven years.

The loans will help Ford convert two truck plants to produce cars and help the company raise the fuel efficiency of nearly 2 million new vehicles a year. The government said it will help Ford transform nearly 35,000 jobs into "green" engineering and manufacturing jobs.

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Ford has said it intends to bring several battery-electric vehicles to market starting next year, with a plug-in hybrid vehicle coming by 2012.

"We want to be in every market segment in the U.S.," said Ford CEO Alan Mulally. "Every year forever we want to continue to improve fuel efficiency."

Ford expects to begin repaying the loans in 2012, with an interest rate based on the current U.S. Treasury rate hovering between 3 and 4 percent, said Ford spokesman Mike Moran. The company would have faced much higher interest rates from private lenders.

Ford can draw from the loan for work done to retool its plants going back to late last year, Moran said. Priority was given to plants at least 20 years old and the facilities must build cars that improve fuel efficiency by 25 percent.

Nissan said it would use its $1.6 billion loan to modify its Smyrna, Tenn., plant to produce zero-emissions vehicles and build a new facility to produce lithium-ion battery packs. The Japanese company has previously outlined plans to develop an all-electric car with 100 miles of pure battery range for release in late 2010.

The electric car will initially be built in Japan. Dominique Thormann, Nissan North America's senior vice president for administration and finance, said the loans could create up to 1,300 jobs at the two facilities and lead to U.S. production of the electric car beginning in 2012.

Nissan Chief Executive Carlos Ghosn said in Japan that the U.S. would be "a very important market" for the company's electric strategy. "I can tell you I'm not at all worried about how to sell these cars because there is an appetite for zero-emission cars."

Tesla, based in San Carlos, Calif., will use $365 million for production engineering and the assembly of the Model S sedan, an all-electric vehicle that is expected to travel up to 300 miles per charge and go on sale in 2011. It will use $100 million for a powertrain manufacturing plant expected to employ 650 workers.

Tesla CEO Elon Musk said the automaker would use the loan "precisely the way that Congress intended _ as the capital needed to build sustainable transport."

General Motors Corp. has requested $10.3 billion in loans from the energy program, while Chrysler Group LLC has asked for $6 billion. Energy officials have said the loans could only go to "financially viable" companies, preventing GM and Chrysler from qualifying for the first round of loans.

Chu said the Energy Department has started discussing details of the loans with Chrysler and has begun reviewing the "technical side" of the loan requirements with GM. GM officials said they hoped to get the money shortly after emerging from bankruptcy protection.

___

Associated Press Writer Ken Thomas reported from Washington, D.C. AP Auto Writer Tom Krisher in Detroit and Associated Press Writer Shino Yuasa in Yokohama, Japan, contributed to this report.

Comments

[prosha]

This is such a waste. If this retooling or factory building made any economic sense the car companies could get loans from banks or from private investors, they wouldn't need gubmnt loans. Too expensive solar, wind, and electric cars will sink this country.

[therealredstateblues]

except that there was this thing called the wall street meltdown shutting off automakers usual lines of credit for capital improvements

[goodkahuna]

wake up this is great. Tesla already produces a car that gets 280 miles on charge. They sold out in there first 2 years. Now they are making a auto less pricey.

You have not studied prosha i suggest you go on the internet do a little homework and you will be shocked.

[planetjeffy]

The Volt will never be made.

Thanks for giving the funds ot companies that actually produce the cars,
not blow smoke up our asz about the next big thing that will never happen.

[lvogt]

I am waiting. As soon as there is a decent, reasonable cost, sufficient range, all electric car out there. I'm buying. Norway's Think City or Think O appear to be nice options... when they available.

[nomorefed]

yaaawn car news is boring

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

~Thomas Jefferson

hat tip to http://www.short.ie/g264dk for the good articles

[Jude55807]

Taxpayers do not have unlimited funds -- but the government continues to spend money like it's their own pocket book.

When capitalism's business cycle veers into discomfort (unemployment, slowing sales and borrowing, etc.) -- the State (government) now suppresses recession with monetary policy (making money cheap and abundant) and fiscal policy (quantitative easing, injections of liquidity, stimulus programs, etc.) so nobody feels pain. But the problems are still there, just hidden for a time by the bailouts. They will continue to grow until another bailout is needed (e.g. Chrysler).

Capitalists and those that embrace the free market reject this narrow notion for many reasons. Chief among them is that fact that experience and progress is the byproduct as we surmount difficulty. The Marines say, pain is weakness leaving the body. These downturns are inefficiencies leaving the system. These loans will be used to prop up inefficient systems. Nobody truly learns. Nobody truly grows. Nobody progresses.

--

Stop the paronioa: You do not need to boycott car manufactures that accept bailouts. Capitalism thrives when you make a decision that fits you. You should find the car that you want -- and that meet the criteria important to you. Car manufacturers that accept bailout money will be required to add inefficiencies to their business model and are at a disadvantage to produce the car that meets your needs the best. You should make car manufacturers and dealers compete for your business. http://excarsalesman.typepad.com/

[Harrier]

Unfortunately, it does not look like the money will be used to create jobs this year. I applaud helping Tesla. Tesla was formed because they thought the auto and oil industry were teaming up in trying to kill anything developed that was not gas powered. It is also known on capital hill. They are making electric cars from known technology and cannot afford development of their own battery technology. They bill themselves as silicon valley's answer to the auto makers excuses. They are also finding that electric cars can drive faster than gas powered vehicles.

[KillTheMessenger]

Actually..­. the speed limit is the same for both gas powered and electric vehicles. Why ANY car manufacturer makes a car that can drive faster than the speed limit is an enigma. It never made sense and continues not to make sense.

:-)

[ferrarimanf355]

As I said once... dude, you own a Prius, you wouldn't know fun-to-drive if it kicked you in the nads.

Or has the smugness corrupted your brain? Leave the fun cars alone, there will always be a market for them, whether you like it or not.

[Dystopic]

I agree, speed limits are ridiculous, which is why I ignore them.

[Dystopic]

they developed the control system for the electric motors and the batteries etc... that's a significant part of an electric cars drivetrain­...

Most of the car is made by Lotus, the battery packs were outsourced - why? because Lotus is good at building small lightweight cars, and the people who manufacture the battery packs do this for a living ...

[Samalabear]

I have never owned a domestic car, never wanted a Ford, although my son's had three Fords that didn't get past 150,000 before they blew their engines blew and numerous other problems -- a Taurus, an Explorer and the latest and greatest, a little Escort wagon. On the other hand, my dad gave me as present his 10-year-old '84 Honda Prelude and 12 years later and 250,000 it was still going strong. Unfortunately it had a nasty metallic paint and a body that did not hold up, but the reliability and engine longevity were unquestionable. My brother has a '98 Honda Civic with over 200,000 miles and it still rides like it's brand new. BTW, the Honda Prelude was also like that.

But I read a very positive article yesterday about Ford in the NYT. The Ford family is risking a lot to keep this company going and they are sticking together. They really are committed to making it work and, to be honest, if I had money I would probably put some of it in Ford stock. Maybe we can pass single-payer healthcare and get that albatross of their back so they can concentrate even more on what they need to do.

[thegreatgiginthesky]

The albatross of healthcare is what is k i l l i n g businesses in this nation. The fact that the pro-business pols can't see it is rather amazing.

[therealredstateblues]

Health care costs put US mfrs at a serious competitive disadvantage against their counterparts in national health care countries, and even worse against those countries like the third world that provide none at all

[therealredstateblues]

most cars if properly maintained should last a good long time

the problem is most people don't bother to change their oil, get tune ups, check their tires or get small problems fixed before they become big problems, and then blame the car or the maker when it cr@ps out

I have followed some pretty simple advice from an old mechanic way back when I first started driving - keep your car clean, the oil fresh, tuned up and check your tires regularly

And it works - I easily get 10 -15 years of relatively trouble free service out my vehicles most have been Fords or Ford made vehicles - Mazdas

[roquelaure]

Sweet! I think that's awesome that Tesla is getting some cash. I think they're an amazing company. Their new sedan is *closer* to a reasonable price for the average American, but it's not quite there yet. Hopefully they will come out with one in the next few years. :)

[KillTheMessenger]

So you are all in favor of giving taxpayer money to a company which makes toys for millionaires? How would you like it if we supported horse breeders which sell horses for the rich who can afford to ride around instead of working the night shift?

It's exactly the same thing.

[ipv4]

Yawn, I guess you never quit. 40-50k cars are not just for millionairs. Stop it already.

[PlanetClaireDeluxe]

heheheh. the versa is NOT for millionaires.

[roquelaure]

Hmm, I think you have Tesla confused. Their latest is a 40-50k car. Expensive yes, but not millionaire territory. The fact of the matter is, innovation is expensive. The rich always get to enjoy it first. Considering they halved the price between 2 models, I think they are clearly interested in making their product available to average people asap.

In the meantime, the contribution to the field they are making is invaluable. We all should want to move to electric cars eventually, and here is a company that is doing it in the here and now.

[YewNeekId]

Pardon me, but isn't Nissan a JAPANESE company?

It's bad enough that Obama bailed out foreign banks, now my tax dollars are pumping up foreign auto companies? This is very disappointing

[thegreatgiginthesky]

Nissan is building a plant in the US to manufacture cars here - thereby employing Americans.

[roquelaure]

Their plant is in Tennessee. I'm pretty sure they have Americans in Tennessee.

[Dystopic]

The fact that it is Japanese should bring you some confort .. their execs are skilled, not exhorbitantly paid, and feel a sense of shame at failure...

only a small amount of the money ends up back in Japan ... most ends up with the workers, suppliers and the north american management team.

[therealredstateblues]

yes - most japanese are to be commended for that

however most of their use of local suppliers is superficial - they still get the lions share from Japan, or japanese owned suppliers

and they are ruthless in their beat downs of suppliers as well

[dynwitch]

It's shameful that governments have to BRIBE the auto companies to create products that will make them more profitable.

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[illusionpainter]

This is B---$--- that my tax dollars are going to a foreign auto company!!!!!! I don't care if their manufacturing facility is here or not, their profits still go back to Japan. JUST UNBELIEVABLE!!!!!! And we wonder what is wrong with the country and OUR manufacturing is being destroyed. That was extra money that could have went to U.S. Auto Manufacturer!!!!

[InspiredByTruth]

wow....I'm actually embarrassed to have read that. For one, the loans are directly going toward expanding manufacturing plants and workforces in the US. Two, we've already give PLENTY to US auto-manufacturers. Oh, and did I say they're LOANS, which mandate companies invest billions domestically and employ thousands of taxpaying workers. When that money gets paid back to the government those jobs are still going to be here. Its not so shocking, especially considering the tax breaks many of those red southern states are giving to Toyota and other foreign companies to locate there. But keep attacking domestic job creation just because the parent company is foreign, it will make sure people never vote for you republicans ever again.

[illusionpainter]

The PROFITS go to Japan!!!!! FACT!!!!!!

[illusionpainter]

BTW, if those jobs went away, U.S. auto companies could expand and hire those workers.

[CrazyHorses]

Tesla only made 345 cars based off the Lotus. Most parts and equipment are foreign. The replacement batteries for these cars are seven thousand and up. The Volt is priced for a battery replacement within 100,000 miles. No demand for these high priced cars. Average full electric car will cost $40,000 and up. I'm all for electric cars, but let the market decide. If you force feed these cars on the public before they are ready they will fail again. This "green jobs" hoax needs to end. Our government is not a bank.

[InspiredByTruth]

The Mitsubitchi imev just got a price reduction to $31K, and they said they expect to sell them for HALF THAT within the next five years. There is most definitely a pent-up demand for EVs, and by 2014 at least 5 major automakers will have mass produced their own versions, bringing down the price of batteries substantially. You're behind the curve, and "green jobs" is where the demand is.

[quiviran]

The batteries that replace initial production batteries for the Volt, Tesla and any other BEV produced this year or next, will not be the same cost or technology wise. The next five years (100K mile battery pack used up at 20K miles per year needs replacement in 5 years) will see huge improvements in technology and reductions in cost. Probably won't follow Moore's Law, but there's a lot going on that most needs demand to get it started.

[KillTheMessenger]

Forward looking statements do not count in engineerin­g... either you can do it TODAY, or you just can't do it. And as all the waffling around the initial sales of the Volt suggests, they can't do it today. It's all an advertising hoax.

[dukeitout]

Why are American taxpayers required to provide money to a Japanese car-maker (Nissan?) Should this be considered foreign aid to Japan? Why not provide the loan to Saturn to improve their Tennesee plant?

[pragmaticdallasite]

You should read the article before commenting.

[Cinderpath]

I read the article, and am outraged that our government is loaning money to Nissan, that money will be used to perfect a manufacturing process which will eventually be outsourced to other countries, putting more American out of work. Do *YOU* think the Japanese would loan Ford money? What a disgrace.

[YewNeekId]

I read it and I'm still pissed.

[uglygnome]

If we are going to give them billions of dollars, and I definitely think we should, then we should insist upon 55 to 65 mpg by 2020. Completely doable considering my Prius gets an average of 44 mpg today.

[KillTheTV]

Tesla is the real answer in the long term. I'm cheering for them!

[therealredstateblues]

yes $100k exitic cars - thats the answer

[Dystopic]

not tesla, LITHIUM ION BATTERIES. That is the advantage that Tesla has. Everyone wil have lithium ion batteries within a few years.

[therealredstateblues]

you do understand that what you are talking about creates some serious engineering challenges

the easiest way to improve mpg is to cut weight - but that comes at the cost of safety

then there are those pesky emmission controls that reduce pollution but rob engine effeciency

most of the efficiency gains with internal combustion technology have already been made - anything more is incremental

then there are batteries and hybrids, which present some serious envrionmental, health and safety issues of their own in their production and disposal. It currently takes more energy to produce a hybrid or electric car than a conventional one

[illusionpainter]

I agree with you. These other people spout off their mouths without knowing what they are even talking about. What happens when peddle car meets tree? Then, they will sue because the vehicle is unsafe. It also takes technology that NO ONE HAS DEVELOPED!!!!!

[uglygnome]

The technology exists, the will does not, especially when there are so many people eager to talk about how difficult it is. It was much more of an impossibility to go to the moon, but that was accomplished within ten years