The DOE's decision comes as the Detroit 3 present their plans for new loan money to the SenateEnlarge Photo
Over 75 applications for the funds have been made, but none have been approved, raising questions as to what is really going on behind the scenes at the Department of Energy (DOE). "We're moving with a sense of urgency," Lachlan Seward, director of the DOE program, told the International Herald Tribune. "But at the same time we are trying to do this in a responsible way that reflects prudent credit policy and taxpayer protections."
When the interim rules were unveiled in last 2008, there was a definite feeling that the funds would quickly be accounted for and sent out. "We're pleased that the DOE shares our sense of urgency and is moving ahead quickly with the rules," said GM spokesman Greg Martin in November. "We're looking forward to putting this money to good use as fast as we can to introduce energy-saving products."
It was anticipated that the first disbursements would take place before 2008 was over, or by very early 2009 at the latest. “Issuance of this interim final rule opens the process for automakers and component manufacturers to immediately apply for government funding under the Advanced Technology Vehicles Manufacturing Incentive Program," said Secretary of Energy Samuel Bodman.
Under the program, up to 80% of the cost of a high-tech fuel-efficient vehicle's project costs can be financed with the loan money, at a payback period of 25 years at an interest rate around 4%. But to get that loan, the carmakers must issue a security interest in all property the funds are used to purchase or acquire. That provision may be waived by the Energy Secretary, but it's standard practice in nearly every sector of the finance industry.
The funding can be used for both new and old plants, though preference will be given to re-equipping plants 20 years or older to produce the greener cars. Eligible projects include "re-equipping, expanding or establishing a manufacturing facility in the U.S. to produce qualifying advanced technology vehicles, or qualifying components" among other, more technical, functions.
Vehicles built with the loan money must be at least 25% more efficient than required by federal law, effectively ruling out most SUV and truck plants, but many large sedans, luxury cars and performance cars as well.