The DOE Has Set up Their $25 Billion Loan for the Auto Industry ~ Hybrid Car Review
Hybrid Car Review: The DOE Has Set up Their $25 Billion Loan for the Auto Industry

Tuesday, November 11, 2008

The DOE Has Set up Their $25 Billion Loan for the Auto Industry

The DOE has set up the $25 billion loan program for the auto industry. Congress set down 60 days to issue their interim final regulations, but the DOE has now issued the regulations in almost half the time.

On November 5th, the DOE issued their Interim Final Rule to help manufacturers (either auto or component) build or reequip or expand facilities for the production of advanced technology vehicles. The vehicle being manufactured must achieve 25% greater fuel economy than similar vehicles sold in MY 2005. The DOE grouped vehicles by classes previously defined by EPA for the purpose of fuel economy ratings, as well as additional subclasses created by DOE for performance vehicles (e.g., sport cars).

The rule will become effective as soon as it is published in the federal registry, although the DOE will accept comments for 30 days. A final rule will be issued after the comment period ends and the DOE evaluates the program.

Applications for the first round of loans will be accepted through December 31st. Each manufacturer must be financially viable. The DOE expects several rounds of loans to be issued.

The DOE even took the time to set up a website for the auto loan program.

The loans will be issued based on when the applications are submitted, how thorough the application is and attainment of any required permits or approvals.

In order to apply for the loan, the manufacturing facilities must be located in the US, the engineering integration and related costs must be performed in the US, and the costs must be reasonably related to the reequipping, expanding, or establishing a manufacturing facility in the U.S. Loans are not available on a retroactive basis.

An interesting point: automobile manufacturers must demonstrate a history of maintaining or improving the fuel economy of their fleet, and so they must show their current fleet is at least as fuel efficient as their MY 2005 fleet (p. 11).

A new manufacturer (no cars in MY 2005 to compare to), must show the vehicles that are the subject of the application must have a fuel economy at least as good as all vehicles in the same vehicle class in MY 2005 (p. 13).

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