$8 Billion in Loans Goes to Ford, Nissan & Tesla


Department of Energy Secretary Chu announced the first round of $8 billion in low-cost loans from its $25 billion Advanced Technology Vehicles Manufacturing Loan Program. The loans are going to Ford, Nissan and Tesla. This funding was set aside not by President Obama as a bailout to keep auto companies afloat—but in September 2008 by former President Bush in order to retool plants to build more advanced technology vehicles. The loans are intended to support hybrids, plug-in hybrids, and clean diesel cars, with a goal of boosting fuel efficiency by 25 percent.

The $5.9 billion going to Ford will help the company shift truck plants to production of cars, affecting about two million units of production and a dozen or more different models, including the Focus, Escape, Mustang, Taurus and F-150 pickup. Ford will also use the money to support development of a range of technologies such as improved internal combustion engines—which the company markets as “EcoBoost”—and hybrid technology. Nissan gets $1.6 billion in loans for plants in Tennessee to produce electric cars and the lithium ion batteries for those vehicles. Construction is expected to start in late 2012. The plant will have the capacity to make 150,000 electric vehicles a year, but Nissan said it will take some time to ramp up to that level. Tesla received a relatively small portion of the government money—$465 million to build plants, most likely in California, for its planned $57,000 Model S all-electric sedan and battery-electric drivetrain designed for Daimler’s Smart EV.

The low-cost loans will carry a discounted interest rate of about 5 percent—enough to save automakers more than $100 million for each $1 billion borrowed. Otherwise, the companies would face interest rates of 15 percent or more. Congress also approved $7.5 billion to cover the costs of insuring the loans.

“This is not a bailout,” said Walter McManus, auto economist at the University of Michigan. “Investing in new products and technologies takes cash. Without incentives to invest in the fuel-efficient products that consumers are now demanding, [carmakers] will continue to spend scarce resources to sell yesterday’s products instead of developing tomorrow’s cleaner products.” Automakers have up to 25 years to repay the money.

General Motors and Chrysler, which asked for $10 billion and $8 billion respectively, were left out of this round. The companies currently are considered ineligible because the loans are designed for viable companies, not ones in bankruptcy. But as they emerge from bankruptcy—as Chrysler has already done—they will negotiate with the government to get a share of the remaining loan money. Chrysler would most likely use the loans to accelerate production of electric cars and plug-in hybrids. GM wants to funds to develop the Chevy Volt and Chevy Cruze, its two most prominent upcoming fuel-efficient models. More than 70 other US automakers, parts makers, US subsidiaries of foreign companies and start-ups have also applied for loans.

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  • Jeff

    Exciting news in my opinion. Hard to tell how long it will be before electric vehicles and plug-in hybrids are available and affordable, but look how far we’ve come with hybrid-electric cars and SUVs over the past 5-10 years. I recently purchased a 2010 Prius and I’m averaging about 55 mpg. Would love to one day move to all electric without much compromise, so this seems to be a step in the right direction anyway.

  • Anonymous

    Would be nice if Aptera gets some cash during the next round. Even $465 million would go a long way towards early production costs.

  • ex-EV1 driver

    Aptera doesn’t qualify as a car because it isn’t planned to pass the Federal Motor Vehicle Highway Safety testing, therefore, it can’t receive any federal funding.

  • Not Believin’

    Since 70% of our electricty comes from burning stuff – ie coal & natural gas – An electric car is a coal burning car;

    And since the grid is about 32% efficienct on average, this makes the well to wheel on electric crs far worse than what we have today.

    Electric, Plug-In hybribs – VERY BAD IDEAS until the electric grid is supported in totality by something clean, which would take about 100 years at today growth rates.

  • Dom

    It would be nice if Ford used some of that money to help make the new Fiesta clean diesel available for sale in the US… that is one car we SHOULD be able to buy here!!

  • Shines

    Sorry Not Believin’ you are right that the grid is 32% efficient, but what we have today – gasoline powered cars – have only 15% efficiency. So even with our “dirty” grid EVs and PHEVs would be 100% better than “what we have today”.

  • ex-EV1 driver

    32% grid efficiency? Where did you get this number?
    Try more like 90% efficiency for the grid. Then the 90% charging efficiency and 90% motor efficiency and you get pretty incredible efficiency for the overall EV efficiency.
    As Shines points out an ICE is about 15% efficient. Hybrids and diesels are still less than 25% efficient.
    This means that the worst coal fired power plant feeding an EV about the same well-to-wheels efficiency as a Prius. This will only improve as the grid improves with time.

  • Samie

    Not Believin’ may have tried to talk about how nasty coal really is, which is true that is the amt. of methane and some extraction methods known w/ coal. But I would not go as far as saying “coal burning car”. I think like others electric consumption offers a wider range of alternatives including using things like solar or wind that can be grid independent. Or say using non peak load energy overnight to juice up your vehicle. Political forces will continue to push for updating grid systems because that is a easy way to spur job growth. The only real problems I see is with the energy sector fighting to reduce state quotes on percentages of alt. energies, wanting no cap and trade regulation, or problems working out agreements with other electric utility companies over expansion of multi-state power lines and distribution rights.

  • Dave – Phoenix

    I am very happy to see Tesla get this loan.

    Thousands of other startup companies applied for loans and didn’t get them.

    This shows that Tesla is a legitimate player in the EV game.

    It looks like Silicon Valley will become the new Detroit after all…..

  • Dave – Phoenix


    Congrats on the new Prius…..

    I did the same thing, buying a new hybrid this year.

    A hybrid to make as much impact as I can today…

    An EV when they become affordable…..

  • Mike G.

    Clinton gave $10 Billion to Detroit to create fuel efficient vehicles and all we got were gas guzzlers and pickup trucks that urban men drive as tanks. Why should we expect anything different this time?

  • Anonymous

    Why is the U.S. government using my tax money to provide loans to a foregin car manufacturer?

  • Bud

    That is a good question.I believe I read in the paper that they are also subsidized by thier govt. so yes why is it we lend tax payer dollars to a foriegn auto maker? Also glad to see Tesla get the loan.Cant wait to buy one of thier sedans.

  • SAm Parks

    Regarding the politics of the DOE ATVM Loan awards:
    So it turns out to be all the best loans money can buy.
    Ford paid over $14M to elected officials and consultants in order to get the loan. Ford paid the third largest amount and Ford got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. 21 elected officials had direct benefit from the deal.
    Nissan paid over $10M to elected officials and consultants in order to get the loan. Nissan paid the third largest amount and Nissan got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. The law and public statements by elected officials state that the money was to increase American competitiveness for America car companies yet the money was given to a Japanese company who will send all of the profits back to Japan. 7 elected officials had direct benefit from the deal.
    Tesla paid over $100,000.00 to elected officials and consultants in order to get the loan. Tesla paid the third largest amount and Tesla got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. Tesla’s filings show that their business model is unsustainable compared to competitors, that they were 200% off on the BOM of their car, that all of their first funding was wasted so they have to pay back twice as much to investors as competing companies and that their technology is so old, it all needs to be redone yet they still got money. 18 elected officials had direct benefit from the deal. Tesla did not even read the rules for the loan and planned to build a building when the NEPA rules make that option impossible so they had to restart the process, which is supposed to put one into a new cycle yet they were kept in the previous cycle and put ahead of Fisker, Bright and others who had applied earlier than Tesla. Tesla provided massively creative accounting records to show that they were financially sustainable and have issued numerous press releases to try to make people think that but, in fact, the truth is that they are not because of bad management issues that they cannot get past.
    The ATVM program was created by Ford, GM & Chrysler lobbyists to pad their company’s pockets and those three had pre-hardwired the entire $25B for their own pockets but something happened in the process when Senator Bingaman added a few key lines that opened the door for OTHERS to apply to build green technology and required that those who get the money were “financially sustainable” businesses. Back when the ATVM was authored to save Detroit, it was fully known that Detroit was going to go bankrupt. Ford had the same problems as GM and Chrysler but they went around the world getting bailout money instead of going first to US funds. As law required public exposure of the bankruptcy, Bingaman’s brilliant plan to finally create a green transportation industry was revealed. The very people that had stopped green cars for over 100 years suddenly became the first people to, accidently, cause them to happen but now others could do it too.
    Bingaman should get the Congressional Medal of Honor for pulling off this impossible trick and finally giving America the Electric Cars it should have had for the last hundred years.
    Once Detroit realized this, they tried to hijack the whole ATVM program with a takeback at the end of 2008 but that effort was defeated by a close late night vote. Now that it was out there, Detroit lobbyists and influencers fought to get the review of applicants delayed for as long as possible because they realized that, in a recession, most of the smaller competing interests could be forced to go out of business if they could just be kept away from the money for long enough. Major American TARP banks have said that the standard commercial loan process that each of these 26 applicants (not hundreds of applicants- There were 26 applicants in the round) should take 4 weeks at the longest and 3 weeks nominally. It seems clear that the loans were delayed due to political agendas and not process issues.
    Bright Automotive had applied on time, ahead of the others, turned in low overhead numbers and a great path too profit but they were virtually ignored while intensive meetings were conducted with Nissan, Ford and Tesla because those parties paid for it. The law says that this, and the purchasing of favors, gave those parties an unfair business advantage using taxpayer dollars, over Bright. A case Bright would easily win if they choose to run with it.
    Clearly, it isn’t over yet. Stay tuned for the Senate, Congressional, Ethics Committee and media reviews of this one. Watch for the charts connecting who-to-who. (It is OK to re-post this)

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  • ex-EV1 driver

    SAm Parks,
    The biggest difference I see between the money winners (Tesla, Nissan, and Ford) and those who didn’t yet get money (Bright, Fisker, etc), however, is not the amount of lobbying money but the fact that all three of the winners actually are making production automobiles today and all have made production electric vehicles (at least in the recent past). Tesla, of course, is the only one that is currently making production automobiles (very fine ones at that).
    Personally, I hate seeing how lobbying is necessary in order to get anything from the government but then I’m opposed to socialism in general.
    I wish Bright the best of luck but see no reason to believe that they will be able to successfully put an electric car into production. I certainly hope that at least a little bit of money goes their direction in the near future.