Obama administration hopes Chrysler will qualify for energy loans

Article by Christian A., on May 17, 2011

Although the Obama administration is supportive of Chrysler Group LLC’s aim to qualify for government loans to build more fuel-efficient vehicles, there are more obstacles to clear with investors and banks.

In a Reuters’ interview, Energy Secretary Steven Chu said that it is still too early to say if Chrysler's application has the technical standards to deserve being granted aid from the agency. Chrysler was one of the recipients of the bailout in 2009.

It is currently working to refinance about $7.5 billion in loans that are owed to the U.S. and Canada. At an event near Baltimore where General Motors broke ground on an electric motor facility, Chu said that as soon as the debt is refinanced, it will be clearer if Chrysler will get a loan from the U.S. Department of Energy.

Congress established the Energy Department loan program to help U.S. and other automakers refurbish old factories to build more fuel-efficient vehicles such as gasoline-electric hybrids and plug-in electric cars.

So far, the loans of Ford Motor Co. and Nissan Motor Co. have been approved. In early 2011, GM withdrew its application after it was able to bolster its finances with an initial public offering last November.

GM’s electric motor plant, which will open in 2013, is devoted to manufacturing crucial parts for vehicle electrification. In 2009, GM had obtained $50 billion in bankruptcy and bailout assistance. The U.S. Treasury presently own about a third of GM while it has less than 10% of Chrysler, which is being ran by Fiat SpA.

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