Ford will use the US$5.9 billion to boost the fuel efficiency of close to two million new vehicles annually. -- PHOTO: AFP
WASHINGTON - THE US government will loan US$5.9 billion (S$8.57 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.
A study published on Monday found that even tighter fuel efficiency rules could help boost the profits of General Motors, Ford and Chrysler by US$3 billion a year.
The University of Michigan study found that the Detroit Three have vastly underestimated the American public's willingness to pay a premium for fuel-efficient vehicles.
The loans are the first awarded out of a US$25 billion program to help automakers meet upcoming fuel efficiency standards, Energy Secretary Steven Chu said at a press conference.
'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.' Another US$465 million will be loaned to electric sports car maker Telsa.
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 Mr 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's request in the hopes that it will successfully emerge from bankruptcy protection, Mr Chu told reporters.
Ford will use the US$5.9 billion retool plants in five states and boost the fuel efficiency of close to two million new vehicles annually.
The department of energy estimates these upgrades will lead to fuel savings of more than 20 million gallons of gasoline a year. That would produce a savings of more than half a billion dollars a year for US drivers at current fuel prices, Mr Chu said.
Nissan will use the loans to modify its Tennessee plant to produce zero-emissions electric vehicles and the lithium-ion battery packs to power them.
Ford chief executive officer Alan Mulally embraced the 'historic green partnership' and said the automaker was committed to investing nearly 14 billion dollars in advanced technology vehicles in the next seven years.
California-based Telsa 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 per charge. The additional US$100 million will be used for a powertrain manufacturing plant. -- AFP
