The Department of Energy (DOE) on Thursday announced that it has closed on its loan offer of $5.9 billion to Ford Motor Company (NYSE: F) to transform factories across Illinois, Kentucky, Michigan, Missouri, and Ohio to produce more fuel efficient models.
The loan is part of the Department’s Advanced Technology Vehicles Manufacturing program (ATVMP), and the loan for Ford Motor Company is the first to be finalized since the program was appropriated in the fall of 2008.
On June 23, 2009, DOE issued a conditional loan commitment to Ford to finance up to 80% of qualified expenditures to improve the efficiency of light vehicles by using technologies that improve internal combustion engines and transmissions, reduce vehicle weight, reduce vehicle drag with more aerodynamic designs, and improve vehicle efficiency through the development of hybrid and plug-in electric vehicles.
The loan proceeds will enable Ford to raise the fuel efficiency of more than a dozen popular models, representing close to two million new vehicles annually, and save more than 200 million gallons of gas a year.
The DOE said the loan builds on steps taken by the Obama Administration earlier this week to require an average fuel economy of 35.5 miles per gallon in the year 2016. That standard will reduce oil consumption by an estimated 1.8 billion barrels, prevent greenhouse gas emissions of approximately 950 million metric tons, and save consumers more than $3,000 in fuel costs.
In June of this year, the Department of Energy announced conditional loan offers to Ford Motor Company, Tesla Motors, and Nissan Motors for a total of $8 billion. The program was appropriated $7.5 billion by Congress to support up to $25 billion in loans to companies making cars and components in US factories that increase fuel economy at least 25% above 2005 fuel economy levels.
The DOE said it plans to make additional loans under this program over the next several months to large and small auto manufacturers and parts suppliers up and down the production chain.
Applications for the loan program have included vehicles running on electricity, biofuels, and advanced combustion engines, and were submitted by both car and component makers, US automakers, US manufacturing subsidiaries of non-US-based companies, major US auto parts suppliers, and innovative startups.
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