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U.S. to Lend Billions to Ford, Nissan for Fuel-Efficient Vehicles

By Kendra Marr
Washington Post Staff Writer

Tuesday, June 23, 2009; 12:06 PM

The Energy Department announced this morning that it would lend Ford $5.9 billion to retool plants in five states for fuel-efficient vehicles.

The department also awarded Nissan $1.6 billion and Tesla Motors $465 million to ramp up electric car production.

The loans are the first wave of commitments from a $25 billion fund to help automakers and parts suppliers offset the costs of retooling factories and building more fuel-efficient vehicles. Congress authorized the program in the 2007 energy bill, but didn't appropriate the money until last year.

"These loans help auto industry meet and even exceed the president's new fuel standards," said Energy Secretary Steven Chu, addressing a crowd at Ford's Research and Innovation Center in Dearborn, Mich.

The Obama Administration recently announced that it will raise fuel standards from 27.5 miles per gallon to 35 miles per gallon by 2016.

Ford will be using the money to produce 13 more fuel efficient models in Illinois, Kentucky, Michigan, Missouri and Ohio. Chu said the loan will launch about 35,000 employees into green engineering and manufacturing jobs.

Nissan will retool its Smyrna, Tenn., plant to build electric vehicles and build a battery manufacturing facility.

The loans will help Tesla manufacture electric drive trains and electric vehicles in California. It will also finance a plant for the Tesla Model S sedan, an electric car about $50,000 cheaper than Tesla's luxury electric roadster.

Chu said the department is currently working with General Motors and Chrysler on their applications for retooling loans. The process has stalled in recent months, as both automakers struggled to keep themselves afloat. The Energy Department program dictates that companies must be "financially viable" to receive the loans, so the car companies would not qualify until they emerged from bankruptcy.

"We intend to lead the nation to energy independence through our great automotive industry," said Michigan Gov. Jennifer Granholm (D).

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062301444.html

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