Ford gets $5.9B, Nissan gets $1.6B in Advanced Technology Loans
June 25, 2009 8:10 AM
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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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6/26/2009 10:12:17 PM
It's really time to get over this feel good story about Ford. Do people not realise that when GM emerges from bankruptcy, Ford will have twice the debt as GM or Chrysler. Here is a quote from a recent CNN article.
"The problem for Ford is that its strength was only relative to the greater problems at GM and Chrysler. Ford built its cash reserves not through profits, but by mortgaging most of the company's assets before the credit crisis of 2008 cut off funding for the other automakers."
They don't have the cash to burn, they mortgaged the farm to stay afloat while the other two had the real cash. Now they are using loan money, not cash, that needs to paid back while they other two filed chapter 11 and restructured. Right now they are sitting on 32 billion in debt compared to 17 and 11 billion for GM and Chrysler respectively. My bet is that by the end of the year they will also be lining up to clear the books as well. So let's try not to give these guys too much credit for getting a loan at a time when anyone could because they were in worse shape than anyone else.
Link for your reading pleasure,
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