The US government will lend US$5.9 billion to Ford Motor Co and US$1.6 billion to Japanese automaker Nissan to invest in improving the fuel economy of their US-built vehicles, officials said on Tuesday.
The loans are the first awarded out of a US$25 billion program to help automakers meet upcoming fuel efficiency standards, US Energy Secretary Steven Chu said at a press conference.
“I’m pleased to announce US$8 billion in provisional loan agreements that will drive innovation in fuel efficiency and help revolutionize the automobile industry in America,” Chu said.
“These loans will help the auto industry meet and even exceed the president’s tough new fuel standards while creating jobs, reducing our dependency on foreign oil and ensuring America’s competitiveness,” he said.
Another US$465 million will be loaned to electric sports car maker Tesla. Additional loans will be awarded to “large and small automobile manufacturers and parts suppliers up and down the production chain” over the coming months, said Chu, who vowed to release the funds as quickly as possible.
The energy department began discussions with Chrysler “the day they emerged from bankruptcy” protection and has already begun reviewing the technical aspects of General Motors’ request in the hopes that it will successfully emerge from bankruptcy protection, Chu told reporters.
Ford will use the US$5.9 billion retool plants in five states and boost the fuel efficiency of close to 2 million new vehicles annually. The department of energy estimates these upgrades will lead to fuel savings of more than 20 million gallons (75.7 million liters) of gasoline a year.
That would produce a savings of more than US$500 million a year for US drivers at current fuel prices, Chu said.
Nissan will use the loans to modify its Tennessee plant to produce zero-emissions electric vehicles as well as the lithium-ion battery packs to power them.
With this loan, “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.
Ford chief executive officer Alan Mulally embraced the “historic green partnership” and said the automaker was committed to investing nearly US$14 billion in advanced technology vehicles in the next seven years.
Nissan welcomed the loan and said it is “committed to being a leader in zero-emissions mobility.”
“This loan is an investment in America,” Dominique Thormann, senior vice president for Nissan North America, said in a statement. “It will help us put high-quality, affordable zero-emissions vehicles on our roads.”
California-based Tesla Motors said it will use US$365 million for production, engineering and assembly of the Model S, an all-electric family sedan that carries seven people and travels up to 300 miles (483km) per charge. The additional US$100 million will be used for a powertrain manufacturing plant.