Nissan Gets Through First Step of U.S. Loan Process
No other Japanese OEMs have indicated an interest in tapping into the $25 billion in DOE loans earmarked for retooling plants to build fuel-efficient vehicles.
Nissan Motor Co. Ltd. has made it through the first step of a process to tap into the $25 billion in loans offered by the U.S. Department of Energy to build fuel-efficient vehicles, a spokesman says.
“We applied just before Christmas,” Nissan North America Inc. spokesman Fred Standish tells Ward’s. “We have received word that our application qualifies us to apply. In other words, we meet all the various tests. And hopefully we will get some of these loans.”
DOE spokeswoman Stephanie Mueller says the agency is reviewing proposals for funding by auto makers, thus far having received 75 applications for $38 billion in projects.
Twenty-six of those applications are moving to the next round of review, and applicants that failed the first round have the ability to re-apply before a March 31 deadline, she says.
General Motors Corp. was one of the auto makers whose initial application was returned for being incomplete, Ward’s earlier reported.
The DOE doesn’t plan to reveal loan recipients, with Mueller saying it is up to each company whether to disclose it has secured the federal financing.
CEO Carlos Ghosn raised eyebrows during last November’s Los Angeles auto show by indicating Nissan would like to take advantage of the loans, available to any manufacturer building vehicles in the U.S. Those auto makers with at least a 20-year history of U.S. manufacturing will be given preference by the DOE in determining which companies get the low-interest loans.
Nissan has assembly plants in Smyrna, TN, opened in 1983, and Canton, MS, in operation since 2003. So far, Nissan has requested loans related to Smyrna only, Standish says.
Fellow Japanese auto makers Toyota Motor Corp. and Honda Motor Co. Ltd., both with U.S. plants more than 20 years old, say they won’t seek DOE funding.
Mitsubishi Motors Corp., which began building cars at its Normal, IL, plant in 1988, has not applied for the loans, says spokesman Dan Irvin.
Mueller says the loans are not a reimbursement program, meaning an auto maker doesn’t have to complete the investment on its own before receiving DOE funding. GM, for example, could use the loans immediately for its Chevrolet Volt extended-range electric-vehicle program by restarting a now-delayed project to tool up for Volt gasoline-engine production in Flint, MI.
Payments on the loans can be stretched out over the life of the vehicle program, Mueller says. For example, manufacturers would have 10 years to repay the government, if the vehicle funded with the federal loans had a 10-year lifecycle in the market.
The possibility of a Japanese auto maker accessing the DOE loans, especially when U.S.-based GM and Chrysler LLC are fighting for survival, means there’s “definitely going to be some political uneasiness about this,” says independent auto analyst Erich Merkle. “This is the problem with government funding. How do you referee that?”
Another analyst says Nissan may experience a backlash for tapping the DOE loans but says the auto maker easily should be able to prove how the money will be spent in the U.S.
– with James Amend
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