Advanced Technology Vehicles Manufacturing Loan Program
Encyclopedia
Advanced Technology Vehicles Manufacturing (ATVM) Loan Program is a $25 billion direct loan program funded by Congress in fall 2008 to provide debt capital to the U.S. automotive industry for the purpose of funding projects that help vehicles manufactured in the U.S. meet higher mileage requirements and lessen U.S. dependence on foreign oil. This program is unrelated to the United States Treasury Department's Troubled Asset Relief Program (TARP) which has been providing bailout funding to two of the big three U.S. automakers.
Given 60 days by congressional statute to issue an interim final rule, the Department of Energy
(DOE), responsible for overseeing the program, finalized the rule 36 days later on November 5, 2008 (compared to 18 months usually needed for such rule making). The loan program was authorized under section 136 of the Energy Independence and Security Act of 2007
, which provided the program with $25 billion in loan authority, supported by a $7.5 billion appropriation to fund the credit subsidy, or the 30% risk profile expected for projects of this type. To qualify, automakers and eligible component manufacturers must promise to increase the fuel economy of their products by 25% over the average fuel economy of similar 2005 models, and apply the loans to future investments "reasonably related to the reequipping, expanding, or establishing a manufacturing facility in the U.S." In distributing the loans the DOE may decide which technologies it believes are most promising and deserving of assistance. Loan recipients must also be "financially viable" for the length of the loan.
It has been speculated that at least two of the Big Three U.S. automobile manufacturers may not be able to qualify for this program because of its fuel economy and financial solvency requirements.
In November 2008, the auto industry began lobbying for the $25 billion to be loaned immediately, as well as another $25 billion to be loaned later to cover retirees health care
costs.
As originally worded, the program was applicable only to four-wheeled passenger vehicles. In October 2009, a bill sponsored by California Representatives Brian Bilbray
and Adam Schiff
was passed extending the program's coverage to include high mileage (75 mpg equivalent) two- and three-wheeled vehicles.
Catalyst for domestic production of low cost cathode
materials and FMC Corporation for scaling up production of stabilized lithium metal powder for high energy cathodes); thermoelectric heating, ventilation and air conditioning (TE HVAC system); and aerodynamic heavy-duty truck trailers (Navistar International Corporation).
; Nissan North America, Inc.; and Tesla Motors
, Inc. to fund the development of advanced vehicle technologies. The loan commitments include a $5.9 billion loan to Ford for upgrading factories in five states to produce 13 more fuel-efficient models, a $1.6 billion loan to Nissan to build advanced electric vehicles and advanced batteries, and a $465 million loan to Tesla Motors to manufacture its new electric sedan. These are the first conditional loans released under DOE's Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, which is using an open, competitive process to provide about $25 billion in loans to companies that produce cars or vehicle components in the United States. To qualify, companies must propose projects that increase fuel economy to at least 25% above 2005 fuel economy levels.
Ford Motor Company will receive its loans through 2011, using the funds to upgrade its engine plants in Dearborn, Michigan; Cleveland, Ohio; and Lima, Ohio, and to upgrade its transmission plants in Livonia, Michigan; Sterling Heights, Michigan; and Sharonville, Ohio. Ford will also upgrade its assembly plants in Chicago, Illinois; Louisville, Kentucky; Dearborn, Michigan; Wayne, Michigan; and Kansas City, Missouri, converting two of the truck factories into assembly plants for cars. In addition, the Ford loans will finance advances in traditional combustion engines and electrified vehicles and help raise the fuel efficiency of more than two dozen popular models.
Nissan aims to manufacture a cost-competitive electric vehicle with a lithium-ion battery pack in Smyrna, Tennessee, and plans to eventually reach a production capacity of 150,000 vehicles per year.
Tesla Motors will use its funding to finance a California-based manufacturing facility for the Tesla Model S
sedan, an all-electric sedan that can be recharged at a conventional 120-volt or 220-volt outlet. Production will begin in 2011 and ramp up to 20,000 vehicles per year by the end of 2013.
The fourth conditional commitment the Department of Energy has entered into under the ATVM Loan program is a $528.7 million loan for Fisker Automotive
for the development of two lines of plug-in hybrids by 2016.
Given 60 days by congressional statute to issue an interim final rule, the Department of Energy
United States Department of Energy
The United States Department of Energy is a Cabinet-level department of the United States government concerned with the United States' policies regarding energy and safety in handling nuclear material...
(DOE), responsible for overseeing the program, finalized the rule 36 days later on November 5, 2008 (compared to 18 months usually needed for such rule making). The loan program was authorized under section 136 of the Energy Independence and Security Act of 2007
Energy Independence and Security Act of 2007
The Energy Independence and Security Act of 2007 is an Act of Congress concerning the energy policy of the United States...
, which provided the program with $25 billion in loan authority, supported by a $7.5 billion appropriation to fund the credit subsidy, or the 30% risk profile expected for projects of this type. To qualify, automakers and eligible component manufacturers must promise to increase the fuel economy of their products by 25% over the average fuel economy of similar 2005 models, and apply the loans to future investments "reasonably related to the reequipping, expanding, or establishing a manufacturing facility in the U.S." In distributing the loans the DOE may decide which technologies it believes are most promising and deserving of assistance. Loan recipients must also be "financially viable" for the length of the loan.
It has been speculated that at least two of the Big Three U.S. automobile manufacturers may not be able to qualify for this program because of its fuel economy and financial solvency requirements.
In November 2008, the auto industry began lobbying for the $25 billion to be loaned immediately, as well as another $25 billion to be loaned later to cover retirees health care
Health care
Health care is the diagnosis, treatment, and prevention of disease, illness, injury, and other physical and mental impairments in humans. Health care is delivered by practitioners in medicine, chiropractic, dentistry, nursing, pharmacy, allied health, and other care providers...
costs.
As originally worded, the program was applicable only to four-wheeled passenger vehicles. In October 2009, a bill sponsored by California Representatives Brian Bilbray
Brian Bilbray
Brian Phillip Bilbray is the U.S. Representative for , serving since 2006, and previously for the 49th district from 1995 to 2001. He is a member of the Republican Party. Bilbray is Chairman of the House Immigration Reform Caucus and a member of the influential...
and Adam Schiff
Adam Schiff
Adam Bennett Schiff is the U.S. Representative for . He has served in Congress since 2001. He is a member of the Democratic Party...
was passed extending the program's coverage to include high mileage (75 mpg equivalent) two- and three-wheeled vehicles.
DOE's Alternative Vehicle Technologies Awards
The U.S. Department of Energy (DOE) announced in December 2008 the selection of six cost-shared research projects for the development and demonstration of alternative vehicle technology projects totaling a DOE investment of up to $14.55 million over three years, subject to annual appropriations. Private sector contributions will further increase the financial investment for a total of up to $29.3 million. The selections announced are part of DOE’s continuing work to develop high efficiency vehicle technologies and are not part of the recently announced $25 billion Advanced Technology Vehicles Manufacturing Loan Program. These projects were selected under three diverse topic areas: lithium-ion battery materials and manufacturing (3M Company for developing advanced anode; BASFBASF
BASF SE is the largest chemical company in the world and is headquartered in Germany. BASF originally stood for Badische Anilin- und Soda-Fabrik . Today, the four letters are a registered trademark and the company is listed on the Frankfurt Stock Exchange, London Stock Exchange, and Zurich Stock...
Catalyst for domestic production of low cost cathode
Cathode
A cathode is an electrode through which electric current flows out of a polarized electrical device. Mnemonic: CCD .Cathode polarity is not always negative...
materials and FMC Corporation for scaling up production of stabilized lithium metal powder for high energy cathodes); thermoelectric heating, ventilation and air conditioning (TE HVAC system); and aerodynamic heavy-duty truck trailers (Navistar International Corporation).
Conditional loans
USDOE announced in 2009 $8 billion in conditional loan agreements for Ford Motor CompanyFord Motor Company
Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...
; Nissan North America, Inc.; and Tesla Motors
Tesla Motors
Tesla Motors, Inc. is a Silicon Valley-based company that designs, manufactures and sells electric cars and electric vehicle powertrain components. It was the only automaker building and selling a zero-emission sports car, the Tesla Roadster, in serial production...
, Inc. to fund the development of advanced vehicle technologies. The loan commitments include a $5.9 billion loan to Ford for upgrading factories in five states to produce 13 more fuel-efficient models, a $1.6 billion loan to Nissan to build advanced electric vehicles and advanced batteries, and a $465 million loan to Tesla Motors to manufacture its new electric sedan. These are the first conditional loans released under DOE's Advanced Technology Vehicles Manufacturing (ATVM) Loan Program, which is using an open, competitive process to provide about $25 billion in loans to companies that produce cars or vehicle components in the United States. To qualify, companies must propose projects that increase fuel economy to at least 25% above 2005 fuel economy levels.
Ford Motor Company will receive its loans through 2011, using the funds to upgrade its engine plants in Dearborn, Michigan; Cleveland, Ohio; and Lima, Ohio, and to upgrade its transmission plants in Livonia, Michigan; Sterling Heights, Michigan; and Sharonville, Ohio. Ford will also upgrade its assembly plants in Chicago, Illinois; Louisville, Kentucky; Dearborn, Michigan; Wayne, Michigan; and Kansas City, Missouri, converting two of the truck factories into assembly plants for cars. In addition, the Ford loans will finance advances in traditional combustion engines and electrified vehicles and help raise the fuel efficiency of more than two dozen popular models.
Nissan aims to manufacture a cost-competitive electric vehicle with a lithium-ion battery pack in Smyrna, Tennessee, and plans to eventually reach a production capacity of 150,000 vehicles per year.
Tesla Motors will use its funding to finance a California-based manufacturing facility for the Tesla Model S
Tesla Model S
The Tesla Model S is a full-sized battery electric sedan developed by Tesla Motors. It is an electric car that was initially codenamed WhiteStar during research and preliminary development. Model S was announced in a press release on June 30, 2008...
sedan, an all-electric sedan that can be recharged at a conventional 120-volt or 220-volt outlet. Production will begin in 2011 and ramp up to 20,000 vehicles per year by the end of 2013.
The fourth conditional commitment the Department of Energy has entered into under the ATVM Loan program is a $528.7 million loan for Fisker Automotive
Fisker Automotive
Fisker Automotive is an American automaker based in Anaheim, California. The company's first product, the Fisker Karma is among the world's first true electric vehicles with extended range...
for the development of two lines of plug-in hybrids by 2016.
External links
- Advanced Technology Vehicles Manufacturing Loan Program - Official website