Energy Secretary: ‘No Promises’ On Chrysler Loan Request
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DETROIT (WWJ) – U.S. Energy Secretary Steven Chu, speaking Wednesday at the North American International Auto Show, sounded very tentative about a loan program aimed at helping auto companies become more fuel efficient.
That program was part of a law passed during the Bush Administration to give automakers low interest loans, to help cover the cost of meeting new fuel economy rules.
Using loan money from the program, Ford has already completed the conversion of the former Michigan Truck Plant, into a factory that builds the compact Focus and electric vehicles.
Chrysler has been waiting on its request for a $3.5 billion dollar loan for three years.
“We are still talking with Chrysler,” Chu told reporters, after a speech to the Detroit Economic Club. “We hope to move forward. There are no promises as to what will happen. We are still talking with them.”
Chrysler CEO Sergio Marchionne has expressed frustration with the loan process, and has even said he might withdraw the request, as General Motors did with its bid.
However, analysts say that Chrysler needs the loans to develop a new generation of hybrids and electric vehicles.
The Energy Department has only awarded $8.4 billion of $25 billion authorized by Congress in 2008. It’s become a political hot potato, with some Congressional Republicans looking to end the program before more loan money is allocated.
Last week, the department changed course, and denied Severstal Steel’s request for a $730 million loan to modernize the former Rouge Steel plant. That loan was touted as a way to bring lighter, high strength steel to cars.
It was also criticized because the money was going to a Russian company that competes with American steel makers.
Chu said politics didn’t go into the decision making process.
“By the time we were getting near making the decision, phase one was done,” he told WWJ AutoBeat Reporter Jeff Gilbert. “That’s sixty per cent of the loan. It’s done! We shouldn’t really be giving loans to projects that are completed.”
An aide to Chu abruptly cut off the secretary’s answer, before he could elaborate.
Chu also said that some loans already made might not be repaid. He said he was “hopeful” that electric startups Fisker and Tesla could repay the loans, but also said that Congress knew the risks when it authorized the program.
“Any new innovative company in a very competitive business is at risk. I think they’re both great companies, and we’ll see what happens.”
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