WASHINGTON - By as early as next spring, U.S. automakers will be able to tap into a $25 billion low-interest line of credit from the government to help them modernize their plants to build more fuel-efficient vehicles. ADVERTISEMENT
The Energy Department, which will parcel out the 25-year loans, says it will take at least six months and possibly up to 18 months to get the program running after Congress on Saturday funded it as part of a giant spending bill.
While one Democratic senator from Michigan, Debbie Stabenow, said it's unacceptable that it will take that long to get the money flowing, the other, Carl Levin, said it will still produce "a quicker shift to the advanced technology than would otherwise occur."
Manufacturers and their domestic suppliers say they will use the money to offer a broader array of gas-electric vehicles, more fuel-efficient engines and plug-in electric cars that could be on the market within two years.
The loans are expected to carry an interest rate of around 5 percent. With weak sales, poor bond ratings and tighter credit markets, U.S. automakers would otherwise have to pay double-digit interest rates.
Executives with General Motors Corp., Ford Motor Co. and Chrysler LLC asked Congress this summer to fund the loans, which were authorized last year in an energy bill that ordered automakers to meet costly new fuel-efficiency standards of at least 35 miles per gallon by 2020.
"Congress clearly recognizes the need to move forward at this critical time to make available this source of capital for automakers and suppliers," said GM spokesman Greg Martin.
It's unclear how the money will be divided, and the companies have not said which projects they'll seek funding for.
GM recently unveiled a production version of the Chevrolet Volt, which is expected to propel the car up to 40 miles on a single charge. The company announced plans this week to build an engine plant in Flint, Mich., to produce a four-cylinder engine for the Volt and the Chevrolet Cruze, a new compact car to be built in Lordstown, Ohio.
Ford has already outlined plans to bring over six small, fuel-efficient cars it makes in Europe for sale in North America. Chrysler showed three electric-powered prototypes last week and said it plans to sell one in the U.S. in 2010.
The legislation gives priorities to facilities that are 20 years or older. Officials with Toyota Motor Corp., Honda Motor Co., Nissan Motor Co. and others did not lobby for the loans and it was not clear if they'll seek funding.
