Automakers: Loans Will Speed Development Of Energy Efficient Cars

September 13, 2008

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Automakers are pushing hard for $25 billion in government loans to help the industry switch over to more energy efficient vehicles.

At the Automotive Press Association in Detroit, Jim Press, Chrysler president and vice chairman, said government loans will help automakers accelerate the commercialization of electric cars, Detroit Free Press reports. “I think for a beginning, $25 billion is an appropriate place to start,” Press said.

GM’s CEO Rick Wagoner told a Senate energy summit that $25 Billion is a “good amount,” Bloomberg reports.

Ford CEO Alan Mulally said the funding would help the automaker retool truck plants to build more fuel-efficient cars.

The loan program is open to all auto companies, but it’s main goal is to help sagging U.S.-based manufacturers retool factories and develop technologies needed to meet government mandate of improving vehicles’ fuel-efficiency by 40 percent by 2020.

The industry recently scaled back their push for $50 billion in industry loans, down to an original $25-billion amount, as included in the 2007 energy bill. Reuters reported that GM Chief Executive Rick Wagoner is trying to get Congress to appropriate $3.8 billion in founds to cover the costs of issuing $25 billion in loans.

However, some critics oppose the loans.

In an interview on CNBC television, Republican Senator Richard Shelby of Alabama said the U.S. government should not back the loans to help domestic automakers.

“I don’t see this as a national problem, I see it as their problem,”said Shelby, adding that the government also needs to move away from the notion that major institutions are too big to fail.

As automakers are facing new regulatory challenges, as well as surging fuel and raw material costs, Toyota’s executive Bob Carter is calling for greater cooperation among automakers and suppliers.

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