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The US Administration is to provide $8bn in loans that will allow selected auto makers to develop fuel-saving products.


The US Administration is to provide $8bn (£4.9bn) in loans that will allow selected auto makers to develop fuel-saving products.


Ford will receive $5.9bn to help convert two truck plants to the production of cars. Ford will also be raising the fuel efficiency of more than a dozen of its models, including the Focus, Escape, Taurus and F-150


For its part, Nissan will use its $1.6bn loan to produce electric cars and battery packs at its manufacturing complex in Smyrna, Tennessee. The loan will aid in the construction of a new battery plant and modifications to the existing assembly facility.


Nissan aims to manufacture an all-electric car, and will offer electric vehicles to fleet and retail customers. It plans to ramp up production capacity in Smyrna to 150,000 vehicles annually. 


Tesla Motors will use its $465m loan to finance a manufacturing facility for its Tesla Model S sedan. The Model S is expected to be roughly $50,000 cheaper than Tesla’s first vehicle, the Roadster. Production of the Model S will begin in 2011 and ramp up to 20,000 vehicles per year by the end of 2013. 


The loan will also support a manufacturing facility for battery packs and electric drive trains to be used in Tesla cars and in vehicles built by other auto makers, including the Smart for Two city car by Daimler.


These are the first conditional loan commitments reached as part of the US Department of Energy’s Advanced Technology Vehicles Manufacturing programme. The department plans to make additional loans under the programme over the next several months to large and small auto manufacturers and parts suppliers up and down the production chain.


The Advanced Technology Vehicles Manufacturing Loan programme will provide loans of about $25bn in total to companies making cars and components in US factories that increase fuel economy at least 25 per cent above 2005 fuel economy levels.