DOE Revives Loan Scheme For Auto Makers

by Derek Kreindler

Published: October 9th, 2014

After unwinding their Advanced Technology Vehicle Manufacturing loan program in 2011, the Department of Energy is bringing it back. According to The Detroit News, the focus of this round will be on suppliers, as well as lightweight vehicle technology.

Despite the stated focus on suppliers, the timing of the announcement comes as FCA CEO Sergio Marchionne raised the idea of an aluminum Jeep Wrangler as a way of helping the venerable SUV meet increasing fuel economy standards – while also claiming that retrofitting the Toledo, Ohio assembly plant for aluminum construction would be far too expensive.

With roughly $16 billion in unused funds, the ATVM program has plenty of cash to spare to help re-tool Toledo – or any number of facilities. But you can bet that Marchionne, shrewd operator that he is, will use the threat of pulling production from Toledo to leverage some funds from the program – if he’s not already using that as a scare tactic in upcoming negotiations with the UAW.

#ATVM #Chrysler #DoeDepartmentOfEnergy #Jeep #JeepWrangler #Loan #Toledo

Derek Kreindler

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Celebrity208 on Oct 09, 2014

Is there a different loan rate for the ATVM than what the suppliers/manufacturers could get directly from banks?

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- Landcrusher on Oct 09, 2014
  
  Often there is an advantage, but if you do the math, these programs will always fail to pass muster. It's government or résumé math that always get used. Similar to research paper math, you get any result you want. If you take out the total cost of everyone involved in the process to create the program, apply for and approve the loans, supervise those people, cover expenses, etc. It's going to be a loser. Don't even bother with the morality or fairness issues. OTOH, it won't be judged that way. It will be judged based on the interest being worth whatever gets accomplished over the total of the programs. While this is an appropriate way to judge venture capital (the value of the investors' time is never considered in spite of them being worth a lot per hour), it's a great lie when used on government programs. It's the difference between charity and welfare on steroids. The reason private property and free markets work the best is because other people's money isn't used as well as personal resources and government money (and pretty much any mega institution's funds) are quickly and easily wasted. The closer the money is to the owner, the more real it is, and will be used more effectively. The less attached to a particular person money is, the more it gets misused. This is why collectivism works much better in a family than in a community and not at all in a nation.
  
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- TW5 on Oct 09, 2014
  
  Yes. Most of the first ATVM recipients were credit rated as junk. They received below-market rates, and some of them received financing they wouldn't have otherwise received.
  
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JGlanton on Oct 09, 2014

A few days ago I was at a ghost town in Colorado at 11,000 feet testing the off-road limits of my rental car when a Wrangler Limited Sahara pulls up. I ask him where they were from. Texas. I asked him if he towed that Wrangler all the way from Texas. He said that they drove it up and it was very nice. Brand new, right from the dealer lot to the journey. I asked him what kind of mileage he got on the trip. He said he got 19 at best, but going across TX with the air-conditioner on he got 17. Highway. They're going to have to do a little more than add some aluminum to fix that. Anyway, now my wife wants one so we can do an off-road camping trip on the Continental Divide.

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- Afedaken on Oct 09, 2014
  
  I was going to excoriate him for using AC, then I re-read and saw TX.
  
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- Iamwho2k on Oct 09, 2014
  
  Aerodynamics. What's the drag coefficient of a Wrangler? 0.50, 0.60 with the roof taken off? Then, I imagine the Jeep's 'trail-rated' tires aren't the slippery, Prius-type rubber. Weight is probably the least of the Jeep's concerns. So, even if Marchionne went aluminum*, that's probably just a third of the battle. *if he doesn't know what to do NOW (given development times), maybe he is wearing too many hats.
  
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- Hummer on Oct 09, 2014
  
  They'd sell much more focusing on cost than battling an uphill battle making it fuel efficient. Put the diesel in it, or put the Hemi in it, but aluminum costs an the other MpG crap won't fly with those buyer.
  
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Redav on Oct 09, 2014

Honestly, if it's a loan program, and if it's run by people who know what they're doing, the program would pay for itself, and thus be perpetually sustainable.

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- Landcrusher on Oct 09, 2014
  
  You mean like a bank? How about we let the government do that with everything else while we are at it? Profit is just for the greedy after all, and capitalism is evil and terrible.
  
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RedStapler on Oct 10, 2014

If you want to make a more fuel efficient Wrangler the 1st step is to shrink it back closer to its historical "normal" size. The current unlimited it quite the Fat F&*# of Jeeps. Take the TJ (97-06) Wrangler, give a a nice 2-2.5L Diesel with a 6-8 speed trans and you are already in the mid to high 20s for real world MPG. My KJ Liberty CRD would get 22-25 real world and it was a 4200lb pig.

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