White House Announces 17 Billion Dollar Loans to GM and Chrysler Now Available

The White House announced they would be making up to $17 billion available in loans to the domestic auto makers in order to stave off their bankruptcy. But, in order to qualify for the loans, some new rules and proof of viability.

There must be a two-thirds reduction in debt by exchanging debt for equitey, more flexible work rules and cuts in wages.

According to Bush, the most important rule is the company must become viable, but not necessarily profitable. "this does not mean the firms has to be profitable but clearly to have a positive net present value the firms have to be profitable soon."

Bush noted, "In the midst of a crisis and a recession allowing the US auto industry to collapse is not a responsible course of action."

The money will come from the $700 billion set aside for the Troubled Asset Relief Program (TARP). $13.4 billion will be available immediately, while another $4 billion is contingent upon congressional approval of the second portion of TARP.

Chrysler has already signed a letter of intent. According to LLC chariman and chief executive Bob Nardelli, "These requirements will require consideration from all constituents, requiring commitment first in principal, leading to implementation this coming year," Nardelli said.

"Chrysler is committed to meeting these requirements."

I would expect GM to follow suit given how badly they've pushed for government loans, while Ford has said they don't need the loans right now.

Update: As expected, word out of GM is they will be applying for the loans, too.

DETROIT – General Motors Corp. CEO Rick Wagoner says the automaker has significant work ahead after receiving a federal bailout Friday, but he is confident GM will work with stakeholders to make the company viable.

Construction of Plant to Build Volt and Cruze Engine Suspended

GM has halted production of its engine manufacturing plant in Flint, MI until it can get the cash it needs to finish the job.  The plant is slated to build the 1.4 liter engines for the Chevy Volt and Cruze.  But even so, the time line for the Volt is not being affected, yet, by the cash crisis at GM.


According to the story, GM is trying to save money by putting off the purchase of the structural steel to build the new factory. But, GM is also saying Volt production will not be delayed by any delays in the construction of the plant.  The assembly of the Volt will happen at the Detroit-Hamtramck assembly plant, while the Cruze is scheduled to be built in Lordstown, Ohio. 

According to the spokesman from GM, there is still plenty of time to build the plant and begin engine assembly and even if there wasn't the plans for the Volt will not be delayed.   The 1.4 liter engine is already being built in Australia, giving GM some options.

Hybrids and Plug-ins Will Increase Sales as Oil Imports Fall Through 2030 According to the US Govt

The government is predicting no growth in U.S. oil consumption until 2030. This is the first time in 20 years that no growth has been predicted.

The prediction is based on the new CAFE standards, requirements for increased use of renewable fuels, and an assumed increase in oil prices as the economy recovers.

What may be even more remarkable, the government is now predicting the increased us of domestically produced biofuels, rising domestic oil production spurred by higher prices will lead to a decline of 58 percent in net import share of total liquids supplied to 40 percent by 2025. It will then increase to 41 percent by 2030.

The EIA is also predicting the import shore of total natural gas use will also decline from 16 percent to 3 percent in 2030.

The government is predicting the price of oil will once again rise as the growth exceeds the supply of non-OPEC related countries.  That will raise the price of oil from it's current $60 (or so) to about $130 per barrel (in 2007 dollars, $189 in nominal dollars) in 2030.

Current laws will also lead to a sharp increase in unconventional vehicle technologies, including flex-fuel, hybrid, and diesel vehicles.  A decline will be seen in the new light-truck share of total light-duty vehicle sales.  Hybrid vehicles will increase from their 2 percent of new light-duty vehicle sales in 2007 to 38 percent in 2030.  Plug-in Hybrid Vehicles (PHEVs) will grow to 90,000 vehicles by 2014, supported by the recently enacted tax credits.  By 2030, PHEVs will account for 2 percent of new light vehicle sales.

Honda Says Don't Expect Insight MPG Numbers From the Insight

Honda, realizing they needed something to fight back against the Prius reputation if they were going to be recognized as the most fuel efficient car company, decided to build a dedicated hybrid, similar in size to the Prius. After retiring the Insight a couple years before, they didn't have any other dedicated hybrids on the road and wanted some of that back.

So they decided to build the (new) Insight. But what they don't want is for people to get confused and expect the same fuel economy they saw in the two-seater Insight they had retired.

Well then, why did they call it the Insight?

That's a little bit of sarcasm on my part, but the truth is they should have come up with a different name for the new Insight. It would have avoided any of this and made my life easier as every time I talk about the Honda Insight now, I have to be careful about which one I'm talking about.

Anyways, to get back on track, Honda wants you to know the new Insight won't get the same fuel economy numbers as the old one for many obvious reasons. These include comparing a two-seater vs. a five-seater and the new MPG guidelines from the EPA.

The price is going to be a lot different, too. At under $20,000, the new Insight is going to be the cheapest hybrid car to buy. If they get decent mpg numbers, the new Insight may make a run at the Prius, especially with the fun toys inside.

Hopefully the fact Honda is bringing up the MPG numbers at all means they're getting closer to finding out what those numbers are going to be.

Audi Kills Plans for Hybrid Q5

According to Autocar, the Q5 hybrid is out indefinitely. Audi has been reluctant to get into hybrid cars and now it's telling people they are out until 'we can make nickel metal hydride batteries safer in crash situations.'

Now, that may be a reason, but really, Audi doesn't want to spend money to develop this fuel saving technology when they can go for other options, like diesel. Or they can use cheaper options like simple start/stop solutions or aluminum chassis.

Audi had previously thought of implementing a hybrid Q7 and a hybrid A4, but both measures were eventually killed off.

Chinese Automaker BYD Launches Plug-in Hybrid Car

As promised, Chinese automaker launched their first plug-in hybrid car, the F3DM (F3 Dual Mode) in Shenzhen, China. It can run up to 62 miles on electric power, then switches over to running on the gas engine. It takes nine hours to recharge using a normal outlet.

And all this for just $22,000 (149,800 yuan). The car will be the first commercialized (according to BYD) plug-in hybrid and is in direct competition with projects like the Chevy Volt from GM and the plug-in Prius being developed by Toyota.

Source: China battery company launches plug-in hybrid car | detnews.com | The Detroit News

The problem is it's unknown what kind of standards have been met with the production of the F3DM. We'll know more if or when BYD begins exporting the F3DM to other countries, including the US.  BYD has said they wish to start exporting to the US by the end of 2009, beginning of 2010.

BYD is receiving compensation from the Chinese government, and local authorities have pledged to buy the F3DM in order to further support their efforts.

Prius Plant in Mississippi is Suspended

Whenever someone talks about how badly run the Big 3 are, and how come they need a bailout to save the US jobs, I have to wonder what they're talking about. With the economic downturn hitting all carmakers, it's a wonder any of them still have money to do anything with. Can you imagine Wal-Mart losing 1/3 to 1/2 of their business for six months or longer and still being in business?

The latest victim to fall is the plant in Mississippi for Toyota. Slated to begin production of the next generation Prius here in the US, completion of the plant has been 'indefinitely' suspended.  One month ago, Toyota had said no decisions had been made, yet, but the delay was being considered.

Construction will be finished, but equipment will not be installed. $300 million has already been invested in the plant.

"Due to the uncertainty of the market, it is impossible to say at this time when production will begin," Toyota said in a statement. "Toyota continues to evaluate its operations globally and reduce production as necessary to match the weak market."

“This is an unfortunate reminder that Mississippi is not immune to the global economic slowdown," U.S. Sen. Roger Wicker said in a press release Monday afternoon. "Today’s news is disappointing, but I am encouraged by Toyota’s commitment to finishing construction and to getting the Blue Springs plant operational as soon as market conditions allow. As a leading hybrid vehicle, the Prius has a very bright future in our country. And while it may have been delayed by the economic downturn, I am confident Mississippi workers will still play an important part of that future.”

The plant in Mississippi was begun with the intention of building Highlander SUVs, but the plans were changed and Prius production was supposed to begin in 2010. 

Delaying the plant production will likely affect other plans, such as building or buying batteries here in the US.