Ford gets billions for green vehicles

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By William Ehart

Ford's focus on fuel efficiency paid big dividends Tuesday when the Energy Department said it would lend $5.9 billion to the company to develop more green cars.

Ford Motor Co. and two other automakers became the first beneficiaries of the Department of Energy's $25 billion fund, established last year, to promote fuel efficiency.

Nissan Motor Co. won $1.6 billion and Tesla Motors Inc. was awarded $465 million.

Energy Secretary Steven Chu announced the awards at Ford's Research and Innovation Center in Dearborn, Mich.

Ford, the nation's second-largest automaker, will use the funds to help upgrade factories in five Midwestern states to produce 13 fuel-efficient vehicles.

Nissan will modify a Smyrna, Tenn., plant to build advanced vehicles and lithium ion batteries. Tesla, a Silicon Valley startup that lists Google co-founders Sergey Brin and Larry Page among its investors, will develop all-electric vehicles and electric drive powertrains in California.

The loans are to help automakers meet new fuel-efficiency standards, passed in 2007, of at least 35 mpg by 2020, a 40 percent increase over current requirements.

President Obama has made fuel efficiency a priority, in some cases reversing Bush-era decisions.

With the loan, Ford gains the ability to extend its lead in fuel-efficient cars, which have helped it gain market share in recent months.

Ford's share of U.S. car sales rose to 16.8 percent last month from 13.7 percent in January.

"This is a tremendous development," Ford Chief Executive Officer Alan Mulally told the Associated Press.

The loans will help Ford build a wide range of fuel-efficient cars, he said.

"We want to be in every market segment in the U.S.," Mr. Mulally said. "Every year, forever, we want to continue to improve fuel efficiency."

Ford expects to begin repaying the loans in 2012, with an interest rate based on the current U.S. Treasury rate hovering between 3 percent and 4 percent, Ford spokesman Mike Moran told the AP.