- Jan 27, 2011
DC 2011: GM on DOE loan withdrawal: "It says a lot about the financial health of the company"
Today, General Motors basically told the U.S. government: we're doing fine. It did this by withdrawing its $14.4 billion loan request from the Department of Energy (DOE) through the Advanced Technology Vehicles Manufacturing Loan Program (ATVMP). The withdrawl request was conveyed to the DOE this morning.
The president of GM North America, Mark Reuss, was trapped in Detroit thanks to a big snowstorm, so Ed Welburn, the vice president of GM Design North America, stepped in to deliver the keynote address at the DC Auto Show. Afterwards, we asked him to explain why GM has cancelled the loan request. He said it wasn't because of the delay the program is experiencing. He said:
We don't want to have those kinds of debts to deal with. I think it says a lot about the financial health of the company. We will not back off on the work that we're doing, the development of technologies, the development of new vehicles. In fact, if anything, that is accelerated.
If GM is against big debts now, why did it apply for the loans in the first place? Welburn said, "We're in a very different position today than we were then." GM's Greg Martin told AutoblogGreen that asking for the loan was, "the only viable option as the time." Martin added that the DOE did not give any guidance about withdrawing the loan.
The old GM asked for a $10.4 billion loan in the fall of 2008 and the new GM re-submitted a $14.4 billion request in late 2009 (which supplanted the first request). We'll never know how much GM could have received, since one of GM's competitors, Ford, asked for $11 billion but only got $5.9 billion. Now that GM won't take (more) government money, does that give the company a marketing advantage compared to Ford? "I would certainly say that the American public would feel better about [us not taking the loan]," Welburn said.