Secretary of Energy Steven Chu announced on June 23 that the federal government would give $8 billion in conditional loans to Ford, Nissan, and Tesla in order to advance green vehicle technology as well as to create thousands of green jobs. The loans are a part of the Department of Energy's $25 billion program to promote fuel-efficient vehicles through a multiple-facet approach as well as to wean the country off foreign oil. Companies are chosen for the program if they are currently producing vehicles that have fuel economies that are at least 25 percent above 2005 fuel-efficiency levels. The Energy Department is reaching for a CAFE goal of 35 miles per gallon by 2020.
Ford was appropriated the highest amount at $5.9 billion, which Chu said will be used for engineering advances to the combustion engine and the electric vehicle as well as to modify assembly plants to fit these new advancements. In a statement on its Web site, Ford President and CEO Alan Mulally announced that the company will be investing $14 billion of its own money over the next seven years in "advanced vehicle technology" and that this federal loan will simply aid in quickening Ford's retooling to green technologies.
While that the program is slated for American car companies, Japan-based Nissan's plans to use the aid stateside has allowed it to secure $1.6 billion in loans. The money will be allocated to upgrading and constructing an additional plant in Tennessee that manufactures electric cars and battery packs. Nissan is set to release an all-electric car in 2010 that will be able to be driven 100 miles on one battery charge, according to the New York Times. The DOE predicts that this loan will create 1,300 new green industry jobs.
Perhaps most unexpected was the announcement that $465 million would go to Tesla, a manufacturer of electric cars based in California's Silicon Valley that caters almost solely to wealthy consumers as, until recently, the entry-level price point to own its product was approximately $100,000. Tesla indicated that the initial $365 million of the federal loan would be put towards developing the company's model S Sedan, its most affordable model at about $50,000 after a $7,500 government tax credit.
Depending on the model, the S Sedan will be able to last anywhere from 160 to 300 miles on one battery charge, though based on current electricity prices Tesla estimated that the S Sedan will be able to go 230 miles for about $5. The vehicle is expected to be released in 2011 and have 20,000 in production by 2013. The remaining $100 million of the loan will be invested in battery pack and electric drive train production. With the total $465 million Tesla is expected to produce more than 1,500 new jobs in California.
Chrysler and GM have so far been omitted from the loan plan, though both have applied and are currently aggressively lobbying for a portion of the $25 billion program, according to The Times. Because GM and Chrysler have already been given billions in federal bailout money and GM recently declared bankruptcy, the Department of Energy reasoned that these companies are not "financially viable" and therefore cannot be considered for a loan. The Times also reported that about 75 companies applied, totaling $38 billion in requested loans.
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