Congress is currently deciding whether to provide Detroit’s carmakers with new loans that could top $25 billion as part of a greater package to help them ride out the storm that is CAFE. The new regulation will force carmakers to improve their fleet-wide fuel economy levels to 35mpg (6.7L/100km) by 2010 – something that will undoubtedly cost billions of dollars to implement.

One of the most effective methods for carmakers to meet the tough standard is to introduce all-electric vehicles as these don’t require any fuel whatsoever. However, with the costs involved in simply trying to meet the CAFE regulations, plus dealing with record low sales and a worsening economy, there’s not much left in the kitty for investment in future technologies.

That’s why America’s carmakers see this new loan package as an essential. Speaking with The Detroit News, Chrysler co-president Jim Press defended the loan package, explaining that U.S. carmakers needed the money to help them pursue technological advances.

"It's not a free bailout," Press told reporters "It's a way for us to accelerate our research and put cleaner vehicles on the market at affordable prices.”

One of the biggest worries is that if American carmakers don’t develop their own battery technology, and instead rely on imported products, then the economy will simply shift from its a dependence on foreign oil to one on batteries.

"We need to stimulate that development here, in Michigan," he said. “I think this money will allow us to do it."

Congress has so far authorized a $25-billion loan package but is yet to fund it. The Detroit 3 are seeking double that amount, however there’s a chance that the package could be rejected altogether. Critics of the plan oppose government aid for an industry that they believe did not invest its money wisely.

Press points out that in other countries, especially in Japan, the government is closely linked with its carmakers and regularly funds investment.

Chrysler is currently working on several electric and plug-in hybrid prototypes, and has even showcased a number of them to dealers. One of the prototypes is already capable of accelerating from 0-60mph in less than four seconds and has a driving range of 300 miles. Press wasn’t willing to reveal when the first of these new-generation of vehicles would hit showrooms.

Pictured above is Press with Chrysler’s EcoVoyager concept, one of three electric concepts showcased by the carmaker at the Detroit Auto Show back in January. The other two were the Dodge Zeo and Jeep Renegade concepts.

General Motors, which is arguably in a much better financial position than Chrysler, is furiously working away on its upcoming Chevrolet Volt plug-in hybrid – a vehicle the carmaker describes a make-or-break model. GM also says the loans are vital in enabling the company to invest in technologies that will help it meet the CAFE regulations.

Ford, on the other hand, is being a bit more cautious with its electric vehicle and plug-in development, choosing to wait out the storm and see what the market is like in five to ten years. Despite this stance, the Blue Oval is also testing a range of new plug-in and fuel-cell prototypes.