Chrysler Could Receive New U.S. “Green” Loans

The U.S. Dept. of Energy is close to awarding loans to Chrysler Group LLC under a $25 billion program to help carmakers and suppliers retool factories to make fuel-efficient vehicles, Bloomberg News reports.

Rep. Gary Peters (D-Mich.) tells the news service that Chrysler's repayment last month of $5.9 billion of U.S. government bailout loans demonstrates the "financial viability" that the DOE requires of loan recipients.

Chrysler has said it hopes to obtain as much as $3.5 billion in low-interest loans. The DOE says it continues to work with the company on the framework of a loan agreement.

Congress created the loan program in late 2007 to help automakers and suppliers meet the stricter fuel economy standards that lawmakers had just enacted. In June 2009 the DOE agreed to loan $5.9 billion to Ford and $1.6 billion to Nissan. Electric car makers Tesla and Fisker received $465 million and $529 million, respectively.

Chrysler and General Motors Co., which were in bankruptcy at the time, were not eligible for the initial loan awards. In January GM withdrew its application for $14 billion of DOE loans, saying it aims to fund the projects from its cash flow.

The DOE has been criticized for disbursing little money after the first burst of loans. The Detroit News has reported that suppliers such as BorgWarner, Continental, Federal-Mogul, Lear and Metaldyne have withdrawn their loan requests.