UPDATE: Ford To Get DOE Loans To Retool Plants -Sources
23 Juni 2009 - 12:42AM
Dow Jones News
The U.S. Energy Department is expected to announce Tuesday that
Ford Motor Co. (F) will be among the first beneficiaries of a $25
billion loan program created by Congress to help auto makers retool
their factories to produce advanced-technology vehicles.
Energy Secretary Steven Chu plans to announce the award to Ford
at an event Tuesday morning in Dearborn, Mich., according to two
Capitol Hill aides with knowledge of the announcement.
An Energy Department spokeswoman declined to comment, as did a
Ford spokesman.
Ford, alone among the Detroit three auto makers in not receiving
federal bailout money, has said it would seek $11 billion from the
loan program to invest in the research and development of
fuel-efficient vehicles. It hopes to get at least $5 billion from
the program by 2011.
The loan program was created as part of the Energy Independence
and Security Act of 2007, which set stringent new fuel-economy
standards for vehicles. The loans are intended to help the auto
industry meet the legislation's target of a 35-miles-per-gallon
average fuel economy for cars and light trucks by 2020. President
Barack Obama has since moved to impose even more aggressive
fuel-economy targets.
Costs associated with revamping plants and investing in research
and development to meet the 2007 law's targets were expected to top
$100 billion.
"This is a much-needed support system for auto makers as we face
these historic sales drops," said Wade Newton, a spokesman for the
Alliance of Automobile Manufacturers, an industry trade group
representing major domestic and foreign auto makers.
He said the government loans would help defray upfront costs and
ultimately lower the price of advanced-technology vehicles. "We
have to be able to have products available to consumers that
they're still willing to pay for," Newton said.
The loans are designed to help auto makers revamp plants to
increase a given vehicle's fuel efficiency by 25% from that of cars
previously made at the plants.
The Energy Department has said for months that awards from the
program were imminent. But an announcement has been repeatedly
delayed, in part because of the sheer volume of applications. The
department initially received 75 applications for loan requests
that far exceeded the money available in the program.
The uncertain fates faced by General Motors Corp. (GMGMQ) and
Chrysler Group LLC are also believed to have contributed to the
delay.
-By Josh Mitchell and Stephen Power, Dow Jones Newswires;
202-862-6637; joshua.mitchell@dowjones.com