Earlier today, General Motors announced that it is withdrawing its request for $14.4 billion in direct loans from the Department of Energy's (DOE) $25-billion program aimed at retooling factories for the production of fuel-efficient vehicles. GM's chief financial officer Chris Liddel, outlined the automaker's choice to cancel its loan request, stating:
Speaking at the DC Auto Show, GM's Ed Welburn said, "This decision will not affect the strong investment we are making in new technologies and design."
This decision is based on our confidence in GM's overall progress and strong, global business performance. Withdrawing our DOE loan application is consistent with our goal to carry minimal debt on our balance sheet.
For the past several months, The General had debated canceling its request for DOE loans, which the automaker first submitted in late 2008. The DOE has been having a tough time distributing the loans in a timely manner anyway, so last week GM's board of directors approved the decision to withdraw the application. However, GM's ongoing commitment to develop and produce fuel-efficient automobiles can be seen in vehicles like the plug-in hybrid Chevrolet Volt and the 40-plus miles per gallon Cruze Eco.
[Source: General Motors]
GM Withdraws Federal Loan Application
WASHINGTON, D.C. – Acknowledging significant improvement in its business performance, General Motors today announced it is withdrawing its $14.4 billion application for direct loans from the U.S. Department of Energy (DOE).
The Advanced Technology Vehicles Manufacturing Loan Program (Section 136 of the Energy Independence and Security Act passed in December 2007) authorized $25 billion in direct DOE loans to companies toward retooling U.S. factories to make vehicles and components that improve fuel economy.
"This decision is based on our confidence in GM's overall progress and strong, global business performance," said Chris Liddell, GM vice chairman and chief financial officer.
"Withdrawing our DOE loan application is consistent with our goal to carry minimal debt on our balance sheet."
Since July 2009, the newly formed General Motors Company successfully launched a $23.1 billion Initial Public Offering of stock and, for the first nine months of 2010, generated $4.2 billion in net income attributable to common stockholders. Additionally, GM has invested approximately $3.4 billion in U.S. facilities that have created or retained nearly 11,000 jobs – most of which have gone towards new, fuel efficient cars like the extended-range electric Chevrolet Volt, the fuel-sipping Chevrolet Cruze, and advanced battery manufacturing.
"Our forgoing government loans will not slow our aggressive plans to bring more new vehicles and technologies to the market as quickly as we can," said Liddell. "We will continue to make the necessary investments to assert our industry leadership in technology and fuel economy."
The U.S. Congress appropriated funding for the DOE loan program in the fall of 2008 at a time when the auto industry was seeking to maintain its product and technology programs while contending with the developing global economic crisis.
GM submitted its current application to the DOE in October 2009.