Feds to lend CAFE money by midyear Automakers, others will share DOE awards totaling $16.5 billion
Feds to lend CAFE money by midyear
Automakers, others will share DOE awards totaling $16.5 billion
Automotive News | January 24, 2011 – 12:01 am EST
The U.S. Department of Energy expects to provide $16.5 billion in loans by midyear to at least a couple of automakers as well as some suppliers and makers of batteries and storage technology to help produce more fuel-efficient vehicles in the United States, a department official said.
General Motors Co. and Chrysler Group are among applicants for the remainder of the $25 billion allocated by Congress to the Advanced Technology Vehicles Manufacturing program. About $8.5 billion was awarded in 2009 to Ford Motor Co., Nissan North America, Fisker Automotive and Tesla Motors.
The disclosure by Jonathan Silver, executive director of the Department of Energy’s loan programs office, suggests the program might soon hit its stride after 16 months of public inactivity.
The pace of awarding loans has come under fire from some lawmakers and businesses.
Silver said last week that the agency would provide loans to at least one large automaker and four or five other high-technology projects, including some from automakers.
“Our goal is to finance as much of the significant technology as possible,” Silver said.
The recipients are likely to include niche automakers with targeted markets as well as large car companies, he said in an interview.
The upcoming Energy awards will be announced on a continuing basis through midyear, Silver said.
The program was funded by Congress in 2008 but has not issued a major award since September 2009.
Energy Secretary Steven Chu attributes some delays to the GM and Chrysler bankruptcies.
Energy Secretary Steven Chu announced a $24 million award to Tenneco in October 2009, but that loan wasn’t completed “because the company decided on a different strategic direction,” Department of Energy spokeswoman Sonia Taylor said last week.
Silver, 53, a venture capitalist, was named to head the program in November 2009 in an effort to expedite the processing of loan applications.
The low-interest loan program was created as part of the 2007 Energy Independence and Security Act, which raised CAFE to 35 mpg. The loans are to help automakers and suppliers make more fuel-efficient vehicles and their parts. The legislation did not mandate a deadline for the government to award the funds.
GM has applied for $14.4 billion in loans, including about $4.4 billion in applications by operations that were reacquired from Delphi, said GM spokesman Greg Martin.
Chrysler’s application “covers a wide variety of technologies,” including electric vehicles, hybrids and advanced-gasoline technology, company spokeswoman Linda Becker said.
GM started making the $41,000 hybrid electric Chevrolet Volt in November and has forecast sales of 10,000 in 2011. Chrysler is developing an electric version of the Fiat 500 for 2012 sale in the United States. Fiat officials also have said natural-gas engines may be suitable for the United States.
In a recent interview, Chu attributed some of the loan program’s delays to GM’s and Chrysler’s bankruptcies. Under the law, companies have to be “financially viable” to qualify for the loans.
Last April, GM fulfilled its final viability requirement by adopting “fresh-start accounting” after emerging from bankruptcy in July 2009, Martin said.
Silver has acknowledged concerns about the delays.
“We are aware that there remains frustration in the Congress and in the private sector that the programs move too slowly,” Silver told the Senate Energy and Natural Resources Committee last September. “While we have made significant improvements, we continue to work to simplify the process and complete deals more quickly.”
The government has received about 130 applications for funding, most of which seek to develop vehicles with greater fuel efficiency than the U.S. goal of 35.5 mpg by the 2016 model year.
Ford is using the loans to raise the fuel efficiency of the Focus, Escape, Taurus, F-150 and other models. Nissan is using the money to help make its electric Leaf in Smyrna, Tenn.
Tesla is building a factory for its electric Tesla Model S sedan. And Fisker is developing plug-in hybrid electric vehicles.
Advanced Technology Vehicles Manufacturing Loan Program
Dec. 2007: Congress creates program.
Sept. 2008: Congress appropriates $25 billion for loans.
Nov. 2008: Chrysler applies for loan.
Jan. 2009: Steven Chu is appointed U.S. Secretary of Energy.
June 2009: Chu announces $8 billion in loans to Ford, Nissan and Tesla.
August 2009: GM applies for loans.
Sept. 2009: Chu announces $529 million loan to Fisker.
Oct. 2009: 3-wheeled vehicles become eligible for loans under new law.
Nov. 2009: Jonathan Silver is named program chief.
April 2010: GM becomes “financially viable” and eligible for loan.
May 2010: Chrysler files new loan application.
Jan. 2011: Silver says $16.5 billion will be awarded by mid-2011.
In 2009, Fisker Automotive and other automakers were awarded advanced technology loans. No major awards have been made since. CEO Henrik Fisker and COO Bernhard Koehler are shown with the plug-in hybrid Fisker Karma.