US loans $8 billion to carmakers to make fuel-efficient cars
24 June 2009
Three automakers, Ford, Nissan and Tesla Motors will receive nearly $8 billion in US Federal low-interest loans from the $25 billion advanced technology vehicles manufacturing incentive programme to make fuel-efficient vehicles in the US.
The US Congress had created a $25 billion fund in 2007 under the energy bill to help automakers boost fuel economy in their vehicles by about 40 per cent by 2020.
After a review of hundreds of applications for the loan from carmakers and parts suppliers by the the US energy department, energy secretary Steven Chu told a a gathering at Ford's Research and InnovationCenter in Dearborn, Michigan yesterday, "Transforming the American automobile industry will not be easy, but we know it can be done."
''These investments will come back to our country many times over by creating new jobs, reducing our dependence on oil, and reducing our greenhouse gas emissions,'' he added.
Under the first disbursement of the $25-billion fund, Ford Motor, which did not avail of the US government bailout this year, will receive $5.9 billion to retool its 11 factories in the Midwest to produce hybrids and electric vehicles.
Separately the company said in a statement, ''Ford will invest nearly $14 billion in advanced technology vehicles in the next seven years. Our partnership with the department of energy will help retool our US plants more quickly to produce fuel efficient vehicles and help meet the new, rigorous fuel-economy requirements.''
Ford had entered into a vehicle-development partnership with diverse components supplier Magna International in January 2009 to introduce a zero-emission lithium-ion battery electric vehicle (BEV) to be delivered to market in 2011. (See: Magna and Ford Motor Company partner to introduce zero-emission battery electric vehicle)
The Japanese carmaker Nissan will receive $1.6 billion to retool its plant in Smyrna, Tennessee, where it plans to build electric vehicles as well as construct a new battery plant to produce 2,00,000 batteries a year. The cash infusion is expected to add another 1,300 jobs and help to roll out 150,000 battery-operated vehicles a year.
In August 2008, Nissan had unveiled a new prototype electric vehicle with batteries twice as powerful as conventional technology, as part of its research and development programme on zero emission vehicles. (See: Nissan unveils new prototype electric car)
The Nissan electric, with a unique body style that is not based on any existing Nissan model, will be marketed in the US and Japan in 2010 and the rest of the world in 2012.
Though slower than rivals Toyota and Honda to embrace petrol-electric hybrids, Nissan, Japan's third largest carmaker, aims to become the industry leader in electric vehicles.
Nissan is also developing hydrogen fuel-cell cars as well as its own hybrid system, predicting that zero-emission vehicles will take a 15-per cent share of the global auto market in the future.
Ssix-year old start up company, Tesla Motors, based in San Carlos, California, will receive $465 million in two parts. The first will be to finance its plant manufacturing the all-electric car Tesla Model S sedan, which runs 300 miles on a single charge. Tesla aims to produce 20,000 vehicles each year. The new investment will create an additional 1,000 jobs.
The second part of the loan will be used to build a plant in California to manufacture 30,000 battery packs by 2013 creating 650 jobs and also to make electric drive trains for which Tesla has partnered with Daimler.
Tesla had been selected to provide electric car batteries and chargers for Daimler's Smart EV electric car in January 2009 and would deliver 1,000 of the batteries this year and next. (See: EV maker Tesla to provide batteries for Daimler's Smart range)
The US energy department officials are now holding discussions with General Motors and Chrysler, where Chrysler has just emerged from bankruptcy protection while GM is restructuring under Chapter 11, for their application of the loan.
GM had asked for $8.3 billion to develop a battery-powered plug-in car, the Chevrolet Volt while Chrysler had asked for $5 billion.