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Ford will use its loans to retool its factories to produce more fuel efficient models, like the 2010 Ford Fusion Hybrid, pictured here.  (Source: 2nd Green Revolution)

Steven Chu, US Energy Secretary and Nobel Prize winner
Ford reaps more benefits of not accepting government bailout funds

Ford will receive $5.9 billion in government loans to retool factories for production of fuel efficient vehicles, while Nissan will receive $1.6 billion. Tesla Motors also received approval for a $465 million loan.

Energy Secretary Steven Chu made the historic announcement at Ford headquarters. "By supporting key technologies and sound business plans, we can jump start the production of fuel-efficient vehicles in America," he said.

The loans are part of the Advanced Technology Vehicle Manufacturing Program, which provides incentives to new and established automakers to build more fuel-efficient vehicles, including hybrid and electric vehicles. The ATVMP was created in 2007 and appropriated funding in September 2008. The $25 billion program is supposed to reduce America’s dangerous dependence on foreign oil and create “green collar” jobs.

"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," Chu said. "Ford will transform more than 35,000 jobs into green engineering and manufacturing jobs."

The program is not related to any economic stimulus package or bailout funding that General Motors and Chrysler have received. Although both companies also applied for funding under the ATVM program, they were deemed to not meet financial viability requirements of the program.  Chrysler emerged from bankruptcy earlier this month in an alliance with Fiat, while GM is still currently in Chapter 11 creditor protection.

Ford will receive the funds throughout 2011 to retool several factories in Michigan, Ohio, Illinois, Kentucky and Missouri in order to produce 13 models. The firm previously announced plans to invest $550 million in retooling its Michigan Assembly plant to produce the all-new Ford Focus and an accompanying battery-electric variant. The Michigan Assembly Plant used to produce Ford's behemoth body-on-frame SUVs: the Ford Expedition and the Lincoln Navigator and is currently being retooled.

"We're changing from a company focused mainly on trucks and SUVs to a company with a balanced product lineup that includes even more high-quality, fuel-efficient small cars, hybrids and all-electric vehicles," said Ford's Mark Fields. "As customers move to more fuel-efficient vehicles, we'll be there with more of the products they really want."

"The transformation of Michigan Assembly Plant embodies the larger transformation under way at Ford," stated Ford President and CEO Alan Mulally. "This is about investing in modern, efficient and flexible American manufacturing. It is about fuel economy and the electrification of vehicles."

The loan is part of a $14 billion investment plan in advanced technology vehicles that Ford  wants to implement over the next seven years.

A large portion of funds is expected to go into development of a battery-electric version of the Ford Focus. According to Ford, the vehicle will feature an electric motor and a lithium-ion battery pack. The vehicle is being developed in conjunction with Magna International and will go into production in 2011 as a 2012 model year vehicle.

Ford also has plans to market a battery-electric version of its upcoming Transit Connect commercial vehicle, a next generation hybrid, and a next generation plug-in hybrid by 2012.

Nissan's North American business unit will receive funds to retool its Smyrna, Tennessee facility to build electric cars. An advanced battery manufacturing plant is also being planned.

"Nissan expects to cut the costs of its batteries in half and ramp up production of 150,000 American-made competitively priced electric vehicles annually," Chu said, in a bid to deflect criticism of government loans to a Japanese company.

Nissan is Japan's third largest automaker. It plans to unveil its first electric vehicle model in Japan on August 2, with sales beginning next year. Nissan will sell those cars first in Japan, with US sales after April 2010. Global mass production will come in 2012.

"We are moving forward with zero-emission vehicles," said Nissan CEO Carlos Ghosn at a shareholders' meeting. "The U.S. is going to be a very important market for the company's electric vehicle strategy".

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Back in the day...
By cparka23 on 6/25/2009 2:36:18 PM , Rating: 3
Remember when car companies budgeted for their own R&D? What happened... Did the money get pushed into corporate jetliners and Rick Wagoner's severance package?

Every bit of news about the auto industry just screams in testament to the utter lack of foresight on the part of auto execs. I know I'm stating the obvious here, but it's just too appalling to leave unsaid.

RE: Back in the day...
By mdogs444 on 6/25/2009 2:57:43 PM , Rating: 2
While the execs do seem to be focused on short term gains, rather than long term profitability, they really are only a smart part of the problem.

Unions using a stranglehold on the companies by forced strikes kept the companies costs increasing. In the past, the auto companies would just pass on the extra costs to the consumer without problem. Now, those costs have gotten so high, that their sales are lacking, and decreasing - if not completely vanishing - their profits.

When your cost per car are $1500-2000 more than your competition, forcing your sales number to dip due to higher prices, how do you expect to save enough for R&D? Just imagine - if they only sold small cars, they'd have tanked years ago because the profit margins on those are small, if not nonexistent due to the increase in cost. It's much easier to pass on several thousands of dollars of costs onto a $30,000 SUV than it is a $14,000 economy car.
I know I'm stating the obvious here, but it's just too appalling to leave unsaid.

No, whats really appalling is that so many people like to lay blame solely on executives and corporate greed, when they know darn well that they can't say that with a straight face.

RE: Back in the day...
By lco45 on 6/25/2009 10:00:30 PM , Rating: 2
I completely agree.

It's disgraceful that the car companies have essentially painted themselves into a corner, making cars that are more and more out of date, and now need a big helping hand to research future products, which should have been part of their operating expenses over recent years.

I blame the bonus system where execs are rewarded for this year's performance, often at the expense of future years.
Execs should be striving for the health of the company, not for a flash of profit this financial year.
Fix the problem by paying decent salaries and zero bonuses to execs. The incentive is they get fired if they suck at their jobs.


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