U.S. lends $8B to Ford, Nissan, Tesla for energy-efficient cars

DETROIT -- Ford Motor, Nissan and Tesla were awarded a combined $8 billion in loans Tuesday under an Energy Department program aimed at preserving jobs and improving vehicle fuel efficiency.

The low-interest loans will be used for U.S.-based projects in Tennessee, California, Illinois, Kentucky, Michigan, Missouri and Ohio.

"We have an historic opportunity to help ensure that the next generation of fuel-efficient cars and trucks are made in America," said President Obama. "These loans … will create good jobs and help the auto industry to meet and even exceed the tough fuel-economy standards we've set, while helping us to regain our competitive edge in the world market."

Ford will get $5.9 billion in loans through 2011 and will use them to develop and apply new technologies to standard gasoline engines and to develop electric vehicles.

Five assembly plants, in Chicago; Louisville; Dearborn and Wayne, Mich.; and Kansas City, Mo., will benefit from the loans. Engine and transmission plants in Michigan and Ohio will also get investments.

For Ford, with its bonds at junk status, the loans offer financing at an interest rate that is much lower than it could get on the open market. Interest on the loans for up to 25 years is pegged to Treasury's comparable cost of funds, an annual rate of about 3.75% this week. Ford likely would have to pay double digits for credit on its own.

"Instead of giving that percentage to the banks, we're able to drive it into developing new technologies," said Mike Moran, a spokesman for Ford.

The $1.6 billion in loans Nissan received will help it expand its Smyrna, Tenn., plant so it can make lithium-ion batteries and install them in an all-new electric car starting in 2012, said Dominique Thormann, senior vice president of administration and finance for Nissan. Until assembly begins at the plant, Nissan will import the yet-to-be-named car from Japan.

Tesla Motors, an electric-car company in California that sells a high-end roadster, will use some of $465 million in loans now to build a plant in Southern California to make its new Model S sedan. The rest will be used later for a plant in Northern California to make battery packs and electric drivetrains to be used in other carmakers' vehicles.