Last year, when the U.S. Department of Energy was doling out its first batch of massive low-interest loan guarantees to car companies under the banner of the Advanced Technology Vehicles Manufacturing (ATVM) Program, it very blatantly left out General Motors and Chrysler -- almost entirely due to their miserable financial situations.
But it seems both companies have turned things around enough to qualify for forthcoming rounds of federal stimulus funding, according to DOE senior advisor Matt Rogers. The department is even working closely with the relevant groups to make sure their applications for the money are up to snuff. Obviously, the government has a stake in seeing these companies gear up production of their greener vehicles -- particularly GM's Chevy Volt, which has been positioned as one of the most consumer-friendly options in this field.
General Motors is applying for $14.4 billion to revamp its manufacturing facilities to produce the Volt and other more energy efficient offerings. Chrysler is hoping for $8.55 billion. If past awards are any indication, the companies probably won't get these full amounts. Last June, Ford applied for $11.4 billion, and ultimately received $5.9 billion. But the money could still go a long way toward retooling GM and Chrysler plants for future designs.
In order to win any amount, both companies will need to prove that their green cars cut their past average fuel economies by 25 percent (from 2005 levels). From what we know about the Volt, it should pass this test with flying colors. This fall, the automotive giant will also launch its 2011 Chevrolet Cruze, which it says gets 40 miles per gallon on the highway.
Chrysler, snatched from the jaws of bankruptcy Fiat, has scaled back its green vehicle ambitions, but is pushing its 2011 Fiat 500 minicar onto the market by the end of the year as well. It should also meet the stringent fuel economy requirements.
So far, the ATVM program has been good to Ford, Nissan ($1.4 billion for its Leaf), Tesla Motors and Fisker Automotive. The two latter choices sparked some controversy, since they seem to be primarily working on pricey luxury vehicles, instead of middle-class consumer products. But they argue that the costs of their technology will inevitably come down as its refined and mass manufacturing kicks in.
More than 100 companies have applied through money via ATVM, but the initiative only has $16 billion of its initial $25 billion pot to distribute. Some impatient competitors have withdrawn their bids, not content to wait for government approval to move forward. Still others desperately need the money in order to scale -- although the DOE isn't allowed to give loans to companies that wouldn't survive without them -- part of the reason GM and Chrysler got held up.