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.