Ford Loves Them Some Federal Loans: Looking for Another $5.1 Billion DOE Loan

Robert Farago
by Robert Farago

Do we really want to have this debate again? You know, the one where Detroit’s defenders claim that federal “loans” are loans not bailout bucks? I guess so. After all, the MSM has been all about Ford being the only domestic not to receive a federal bailout. And now we hear that The Blue Oval Boys have landed a $5.9 billion dollar retooling loan from the Department of Energy. As expected. “Our business plan assumed about the amount we got,” FoMoCo CEO Alan Mulally told Reuters. “It’s very consistent with our plan.” Automotive News [sub] reports that Ford. Wants. More.

Mulally said Ford could be in line for more funding from the Energy Department program. The agency has $17 billion in additional funding for loans to auto companies and congressional allies of the auto industry are backing efforts to allocate another $25 billion.

A greenhouse emissions bill pending in Congress would double that amount to $50 billion. [Story coming.] Ford’s original total request was $11 billion.

Let’s review: Under the terms of the loans, Ford can use the $5.1 billion to pay for up to 80 percent of the cost of retooling an American plant to build vehicles that are at least 25 percent more efficient than the ones that were previous assembled at the facility. We’re talking about a 25-year loan. The interest rate: four percent. That particular piece of taxpayer generosity saves Ford a projected $100 million per $1 billion borrowed (compared with normal market rates, which they probably couldn’t get). Oh, and the DOE can make that a zero percent interest deal for the first three years, if need be.

Need be. Whether you view this DOE loan as a hand-out or a hand, one thing’s clear: Ford’s burning cash. Unless the market recovers, they are in no better shape financially (product’s a different story) than GM or Chrysler. Worse, actually, as they don’t get to wipe the slate clean.

Robert Farago
Robert Farago

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  • King Bojack King Bojack on Jun 27, 2009

    You could help your Ford shares by buying a Ford. Seems to be fairly self serving in a good way.

  • Rnc Rnc on Jun 29, 2009

    bozwood : I worked for a non-financial company were all of our positive net equity was represented by the goodwill associated with the name of a company we acquired. Do you have thier Audited Statements by the way? And I mean a $2 Billion/year company.

  • 3-On-The-Tree Lou_BCsame here I grew up on 2-stroke dirt bikes had a 1985 Yamaha IT200 2-strokes then a 1977 Suzuki GT750 2-stroke 750 streetike fast forward to 2002 as a young flight school Lieutenant I bought a 2002 suzuki Hayabusa 1300 up in Huntsville Alabama. Still have that bike.
  • Milton Rented one for about a month. Very solid EV. Not as fun as my Polestar, but for a go to family car, solid. Practical EV ownership is only made possible with a home charger.
  • J Love mine, but the steering wheel blocks dashboard a bit, can't see turn signals nor headlights icons. They could use the upper corners of the screen for the turn signals. Mileage is much lower than shown too, disappointing
  • Aja8888 NO!
  • OrpheusSail I once did. My first four cars were American made, and through an odd set of circumstances surrounding a divorce, I wound up with a '95 Nissan Maxima which was fourteen years old and had about 150,000 miles on it.It was drove better, had an amazing engine, and was more reliable than any of my American cars. This included a new '95 GMC pickup that went through five alternators in under two years while the dealership insisted that there was no underlying electrical problem while they tried to run the clock on the warranty.That was the end of 'buy American'. I've bought from Honda and VW since, and I'll consider just about anything except American now.
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