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Auto Loan Announcement
Secretary Steven Chu
Tuesday, June 23, 2009
The American innovation engine, when revved up, is without question, the greatest in the world. Today, we are putting that engine into gear and the pedal to the floor.
I'm pleased to announce $8 billion in conditional loan agreements that will drive innovation in fuel efficiency and help revolutionize the auto industry in America. This package includes $5.9 billion to help Ford Motor Company transform factories in five states, including Michigan. These loans will help the auto industry meet and even exceed the President's tough new fuel economy standards, while creating jobs, reducing our dependence on foreign oil, and ensuring America's competitiveness.
I want to thank Governor Granholm, Senator Stabenow, Congressman Conyers, and the Michigan delegation for their commitment to a clean energy economy. I also want to thank a few people who are not here - Congressman Dingell - for creating the Advanced Technology Vehicles Manufacturing Program, and Senator Levin for his tireless advocacy for Michigan workers. And I want to say to the workers here: we know America's autoworkers are the hardest-working, best-trained, most-productive workers in the industry.
Today's announcement is part of President Obama's commitment to a new energy strategy for America. As President Obama has said: "The nation that leads on energy will be the nation that leads the world in the 21st century."
That means the most fuel efficient cars in the world must be made right here in America. That's not just a talking point for this Administration; it is a genuine commitment.
As a Senator, Barack Obama led efforts to jumpstart federal investment in advanced vehicles. As President, he made new investments in electric vehicles and advanced batteries through the Recovery Act. Last month, he brought industry, labor, and government together to increase mileage standards, which will spark innovation.
Today, we're taking the next step toward the President's goal. I can attest that this loan program has been a personal priority for the President. In fact, when I took this position, it was one of the areas the President mentioned would need close and sustained attention. As Secretary, I have been committed to getting these loans out the door as quickly as possible.
The loans I'm announcing today will go to three different companies. Their diversity reflects the auto industry in America today.
Tesla Motors - an entrepreneurial start-up company - will receive $465 million in loans to help produce an electric vehicle that is $50,000 cheaper than its first model, with a fuel efficiency equivalent to more than 250 miles per gallon. Tesla will also manufacture drive trains to power the electric vehicles of Daimler and other carmakers, in addition to their own.
The Tennessee facilities of Nissan - a major auto company with a significant U.S. presence - will receive a loan of $1.6 billion to manufacture electric vehicles and batteries. Nissan expects to cut the cost of its batteries in half and to ramp up to production of 150,000 American-made and competitively-priced electric vehicles annually.
And the Ford Motor Company - an American icon - will be awarded $5.9 billion in loans so that American workers can raise the efficiency of more than a dozen popular models, including the Focus, the Escape, the Taurus and the F-150. Ford will transform nearly 35,000 jobs into "green" engineering and manufacturing jobs.
Ford's innovations will touch on many parts of its portfolio - from advances in conventional combustion engines to advanced transmissions to new hybrid electric technologies. Overall, this loan will help Ford raise the efficiency of close to two million new vehicles annually. We estimate these upgrades will lead to fuel savings of more than 200 million gallons of gas a year. With gas prices around $2.60 per gallon, that means savings of more than half a billion dollars a year for American families.
The investments in this package today will come back to our country many times over - by creating new jobs, reducing our dependence on foreign oil, and cleaning up the air we breathe.
These are just the first of up to $25 billion in loans that will be offered through the Department of Energy's Advanced Technology Vehicles Manufacturing program. Over the next several months, additional loans will be awarded to large and small auto manufacturers and parts suppliers up and down the production chain.
Transforming the American auto industry will not be easy, but we know it can be done. During World War II, Detroit transformed itself at a breathtaking pace to meet wartime production needs and become the Arsenal of Democracy. Today, we need a similar effort to win the battle against climate change and to jumpstart our economy.
We know our workers have the skills. We know our engineers have the ingenuity. And we see today that the auto industry itself has the will and ability to innovate and change.
The Obama Administration is proud to be your partner in this effort. While it is difficult to predict the price of oil one year from now, the laws of supply and demand suggest that the price of oil will inevitably rise. The economic strain of spending hundreds of billions of dollars on importing oil ripples through our economy. For the sake of our prosperity, security and environment, we should set as our goal to make the most fuel efficient cars in the world.
Location: Ford's Research and Innovation Center
Media contact(s): (202) 586-4940