The U.S. Government created a requirement that by 2020, the majority of cars sold here must get at least 35 miles per gallon. This requires a big commitment on the part of auto makers and so the Energy Department was authorized last year to lend $25 billion dollars. The first round of financing is expected to be announced today with Ford, Nissan, and Tesla getting all getting a sizable chunk during this first round. GM and Chrysler both wanted a bunch of money too, but neither fit the criteria of being a “financial viable” so they were disqualified for this first round.
Nissan hasn’t announced how much the Japanese automaker has requested from the U.S. Government, but we know that Michigan-based Ford and California-based Tesla Motors Inc. are expected to get $5 billion and $450 million respectively.
This $25 billion fund was approved by Congress in 2008 to help auto makers retool facilities and speed up development of more energy efficient vehicles. It was the Government after all that decided that vehicles needed to reach an average of 35 miles per gallon by a random date instead of the natural evolution of development and technology.
Nissan, a Japanese-based company, requested money to help develop and build a car that will run a 100 miles on battery alone. This car will be built in Japan initially, with the possibility that the Smyrna, Tenn will build it eventually.
Ford is seeking a total of $11 billion from the fund, but only might get $5 billion during the first round. The money will be used to bring more battery powered vehicles to the market, including a vehicle for commercial use by 2010 (A Ford Transit plug-in maybe?) and a plug-in hybrid by 2012.
We’ve known for a while that Tesla was seeking money from the fund to help with the Model S all-electric sedan. The $450 million that the California-based company has applied for would go to help build the manufacturing facility need to make that car. We wonder if the pending lawsuit against both Tesla Motors Inc. and CEO Elon Musk might delay future funds seeing as there is that “financial viable” clause.
It’s only fair that the U.S. Government is helping auto makers with this money after declaring that by 2020, the vast majority of their autos must be 40% more fuel efficient than they are currently in order to be sold within its borders. We just hope, as taxpaying US citizens, that there is a requirement that the funds will be used to employee Americans who are building cars and parts for the American market. It is after all our money being used.
“We just hope, as taxpaying US citizens, that there is a requirement that the funds will be used to employee Americans who are building cars and parts for the American market.”
Are you suggesting protectionism?
woooooooooooooow
thank you
The only auto companies to receive funding from government should be TESLA and companies (USA) like them. Protectionism are you joking?? Seems TESLA is the only company DELIVERING A PRODUCT that we so desperately need NOW. Sorry that TESLA is an AMERICIAN COMPANY, but then again, when AMERICIANS are forced by whatever, seems our true nature comes to light before any other country. So lets reward US, and leave your politically correct protectionism where it belongs, NOT in the USA.
I think it was a good point from the government many of my friends work on one of the listed companies.
Taxpayers do not have unlimited funds — but the government continues to spend money like it’s their own pocket book.
When capitalism’s business cycle veers into discomfort (unemployment, slowing sales and borrowing, etc.) — the State (government) now suppresses recession with monetary policy (making money cheap and abundant) and fiscal policy (quantitative easing, injections of liquidity, stimulus programs, etc.) so nobody feels pain. But the problems are still there, just hidden for a time by the bailouts. They will continue to grow until another bailout is needed (e.g. Chrysler).
Capitalists and those that embrace the free market reject this narrow notion for many reasons. Chief among them is that fact that experience and progress is the byproduct as we surmount difficulty. The Marines say, pain is weakness leaving the body. These downturns are inefficiencies leaving the system. These loans will be used to prop up inefficient systems. Nobody truly learns. Nobody truly grows. Nobody progresses.
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Stop the paronioa: You do not need to boycott car manufactures that accept bailouts. Capitalism thrives when you make a decision that fits you. You should find the car that you want — and that meet the criteria important to you. Car manufacturers that accept bailout money will be required to add inefficiencies to their business model and are at a disadvantage to produce the car that meets your needs the best. You should make car manufacturers and dealers compete for your business.
So if you are thinking about a car, check out this process on this blog: http://excarsalesman.typepad.com/
And Tesla is “financially viable”? Spare me! The government would be better suited by giving the money to the X Prize foundation, universities, or even individual entrepreneurs. You’re more likely to get a decent performing car that an average consume could afford to buy, and still advance the technology that way.
@ajira “financially viable” that’s always the question
@Matt Burns ???
I think this should have been a lot earlier… but it’s not too late and i hope things will be able to change regarding this industry.