SEARCH BLOG: AUTOMOBILES
As The Detroit News reports today:
Feds loan Ford $5.9B to build greener carsWhile I have no doubt that Ford appreciates the access to the money and lower interest rates, you have to step back to see that there is just something ominous in this "gift." Throughout the recent collapse of General Motors and Chrysler, Ford has been able to maintain a certain independence and that has been an advantage in both marketing and customer reaction. Now the Ford team will become "one of those guys."
Nissan, Tesla also benefit from Energy Department funding
Bryce G. Hoffman / The Detroit News
Dearborn -- After nearly two years of political wrangling, the U.S. Department of Energy approved $5.9 billion in low-interest loans for Ford Motor Co. to help fund the development and production of new, more fuel-efficient cars and trucks.
The money will not just help pay for fuel-sipping engines and electric cars; it will help the nation's only solvent automaker survive one of the worst market declines in the industry's history, which has already sent its crosstown rivals into bankruptcy.
Why has this happened? Besides the tough market conditions, the government has played the roles of Lenny and Louie. Lenny is the guy that causes a big problem for a business. In this case, completely unreasonable mileage mandates... especially for trucks. Then Louie steps in and offers a "little loan for a small price"... your company's soul. Later, when you are still struggling under Lenny's oppressive tactics, Louie informs you that he will have to take over your business "to save it." It looks like Ford is about to step into the quagmire.
How can I question this fabulous "gift?" How could I compare the Federal government to Organized Crime? Well, let me ask you a question: what happens to Ford when they take that money and build a lot of tiny, expensive cars and trucks that people don't want or can't afford?
From Automotive News:
But keep looking over your shoulder, anyway. It may be "just a loan," but that doesn't mean the rules of the game can't change. Just ask the GM and Chrysler bondholders.
The money announced for Ford today will reach the automaker as it does the work and spends the money. The first check could arrive within the next couple of months, she said. Some financial paperwork must be completed.
The initial loan money will be for work that dates back to December 2008 on projects such as Ford's electric vehicles and the turbocharging and direct-injection strategy known as EcoBoost, Cischke said. The money will be doled out through 2011, and payback will begin in 2012.
Ford qualified for loan assistance on projects affecting 13 nameplates and 11 factories in five states.
Vehicles include a electric Transit Connect small commercial van slated to go on sale in 2010 and an electric Ford Focus that will follow in 2011. Other approved projects involve six-speed transmissions and hybrid and ethanol-powered vehicles.
The loans give Ford access to money at low single-digit interest rates. Ford spokesman Mike Moran said today's interest rate on the loans will be 3.7 percent, compared with 13 to 15 percent if the company had tapped market-rate credit, he said.
Cischke said she hopes the public will distinguish these loans from the bailout money that Chrysler Group LLC and General Motors have received. Congress passed the original legislation in December 2007 and appropriated the money last fall.
"People need to understand that this is money that was separated a long time ago, actually before the economic crisis," she said. "I hope people do see it as different because it's very different. It's not emergency money.
"This is not about viability. This is about investment in the future and in fuel-efficient technologies that we need, and it helps us accelerate that."
And it won't give the government any ownership of or control over Ford's projects.
Said Cischke: "We decide what we're working on."