2011 Chevrolet Cruze Eco
Over the last year, the U.S. Department of Energy has granted almost $9 billion of low-interest loans to help automakers retool for more fuel-efficient cars.
According to a report last week in the Detroit News, that exclusion may be about to end. The DoE is said to be ready to grant loans to each company now that both have emerged from bankruptcy.
General Motors has applied for $14.4 billion, including a number of requests originated by Delphi, from which it has taken over several parts plants. Chrysler has asked for $8.5 billion. [UPDATE, Oct 2011: The company's current applications request roughly $3.5 billion.]
Last year, during the brutal bankruptcies that involved tens of billions of dollars of government restructuring funds for both companies, the DoE held up considering requests from GM and Chrysler.
Under the terms of the program, it was not allowed to grant loans to companies that could not survive as businesses without the loans. During bankruptcy, both companies' fates were unclear; now, they are considered financially viable.
This fall, GM will launch its 2011 Chevrolet Cruze compact sedan, with higher gas mileage ratings than the aged and uncompetitive Cobalt sedan it replaces. The Cruze Eco is rated at 40 mpg highway.
By the end of the year, Chrysler will begin selling the 2011 Fiat 500 minicar, which will be built in Mexico by its new owner and savior, Italy's Fiat.
The $25 billion program goes toward renovating plants at least 20 years old to produce vehicles at least 25 percent more fuel-efficient than their predecessors. Altogether, roughly 100 firms have applied for $43 billion.
Ford has been the largest single recipient, getting almost $6 billion for work on 13 separate models. While some will use electric or hybrid powertrains, most will be fitted with its EcoBoost turbocharged gasoline direct-injection engines.
Following Ford is Nissan, who recently closed on $1.4 billion to build their 2011 Nissan Leaf electric hatchback in Smyrna, Tennessee, along with a later lithium-ion cell plant in the same location.
The DoE isn't uniformly generous, however. In March, it turned down the secretive V-Vehicle Company, which had applied for a $320 million loan to build a low-cost hatchback with a standard gasoline engine.