First Buyers of Nissan Leaf Get a Trunkful of Perks

NY Times

Tax credits, rebate checks, personalized home visits, government giveaways — even customer service calls from top corporate executives.

The first all-electric car from a major auto company, the Nissan Leaf, arrives at dealerships in December, but thousands of Americans are already learning that going electric can come with perks like no other car purchase.

“It just keeps getting better and better,” said Justin McNaughton, among the 20,000 people who have reserved a Leaf. “My wife thinks it’s funny because at the end of the day, we’re just buying a car.”

Since Mr. McNaughton, a lawyer in Nashville, paid his $99 deposit, he has been bombarded with government incentives — promises of a $7,500 federal tax credit, a $2,500 cash rebate from the state of Tennessee, and a $3,000 home-charging unit courtesy of the Energy Department.

When he had questions about the Leaf, the answers came in a 40-minute telephone call from a senior manager in Nissan’s corporate planning department.

“You kind of feel like you’re one of the chosen people,” Mr. McNaughton said.

Precisely. It is all part of an unprecedented effort by federal, state and local governments to stimulate demand for cars that have zero tailpipe emissions — and Nissan’s pre-emptive bid to corner the all-electric market much the way that Toyota dominated the early hybrid market with the Prius.

The government subsidies are shaving thousands of dollars off the Leaf’s $32,780 sticker price, while other benefits are piling up, like free parking in some cities and the use of express lanes on highways usually reserved for cars with multiple passengers.

In Tennessee, where a Leaf assembly plant is being built, Leaf drivers will be able to charge their vehicles free at public charging stations on 425 miles of freeways that connect Nashville, Knoxville and Chattanooga.

“It’s almost shocking how many subsidies are available on the Leaf,” said Jeremy P. Anwyl, chief executive of the auto research Web site Edmunds.com. “We are putting a lot of money behind this technology.”

Nissan expects the typical Leaf buyer to fit a highly desirable demographic: affluent, college-educated consumers in their mid-40s who are both environmentally sensitive and willing to take a chance that electric technology will be as safe and reliable as internal combustion engines.

Better still, about 85 percent of the people who have reserved a Leaf do not currently own a Nissan, giving the brand exposure to a new audience. Interest in the car has been so great that the company has stopped taking reservations for the initial production run — the Leaf is being built in Japan, with assembly at the new plant in Tennessee beginning in 2012 — but Nissan has plans to sell as many as 500,000 electric cars worldwide by 2013.

The Obama administration has made electric vehicles a centerpiece of its drive to reduce the nation’s reliance on oil, and is pumping up subsidies with a goal of getting a million electric cars on the road by 2015. Proponents of electric cars also point to their zero tailpipe emissions, though the electricity to charge the cars creates emissions.

So far the only electric cars available in the United States are made by small companies, like Tesla Motors, and are prohibitively expensive for most buyers (the Tesla Roadster is priced at over $100,000). Other automakers are in various stages of introducing electric vehicles to the market, and General Motors is preparing to bring out the Chevrolet Volt, a $41,000 model that runs on electricity but is not all-electric because it has a gas engine to extend its driving range.

So for now, at least, the Leaf, which Nissan claims can travel 100 miles on a single battery charge, has the stage pretty much to itself. So Nissan is dedicating extensive resources to the introduction and is taking consumer outreach to new lengths.

The company has studied potential buyers in focus groups, on Internet dialogues and at Leaf “tour stops” at shopping malls across the country. Nissan has even hired a firm to make “home visits” to prospective buyers to make sure their garages are properly equipped for charging the vehicle and to answer other questions.

“These people are the visionaries who see the opportunity and want to be a part of it,” Trisha Jung, chief marketing manager for the Leaf, said of the customers who had reserved a Leaf. “They will be demonstrating every day that this is a practical technology.”

Mr. McNaughton, the Nashville lawyer, said he was unaware that he had even applied for a free 240-volt charging station for his home. But by filling out a questionnaire, he was selected to be one of 5,700 new Leaf owners to get the charging unit. In exchange, he agreed to let the EV Project — a $230 million national program financed by various government agencies, utilities and corporations — monitor his battery-charging habits.

A 240-volt home charging unit can give the vehicle a full charge in about eight hours, Nissan says.

Ken Muir, an engineer in San Jose, Calif., had a similar surprise when he first saw the Leaf at a mall last year. After mentioning his interest to a Nissan employee, he was contacted by the head of Nissan’s West Coast communications team, who arranged for Mr. Muir to get a personal test drive.

After putting down his $99 deposit, Mr. Muir met for an hour in his home with a technician from Nissan’s supplier of charging stations. “It’s been really amazing to get this amount of personal attention from a huge car company like Nissan,” he said.

He is also a bit giddy about the level of financial support he will get — the $7,500 federal tax credit as well as a $5,000 credit from the state of California, and another $2,000 federal credit toward the purchase of a charging unit.

“I’ve wanted an electric car for 10 years, but I never expected it to make this much economic sense to get one,” Mr. Muir said.

The car itself will keep Nissan connected to its customers long after they drive it off the lot. A communication module installed in the Leaf’s lithium-ion battery will send data to Nissan that monitors the condition of the battery and how it is being used. “It’s not a ‘Big Brother’ thing,” said Mark Perry, head of North American product planning for Nissan. If Nissan sees that a battery cell “has behaved outside the norm, we want to call you or e-mail you and say, ‘Come on in and let’s check it out.’ ”

The first Leafs go on sale in December in five states — California, Oregon, Washington, Arizona and Tennessee, all of which are places where the EV Project is building charging stations.

Nissan Announces Leaf will Cost $25,000

CNN Money

Nissan announced Tuesday that its Leaf electric car will come with a sticker price of $32,780. But after a federal tax credit of $7,500, the car will only set you back about $25,280.

That would make the Leaf considerably less expensive than General Motors' Chevrolet Volt, which is expected to cost around $40,000, or about $32,500 after the federal tax credit.

The Leaf expected to go on sale in December, one month after the Volt.

By keeping the sticker price low, the Leaf will be profitable for Nissan, said Mark Perry, Nissan's director of product planning. That means customers should expect more variants of the Leaf in coming years, he added.

Nissan has already said that there will be a luxury Infiniti version of the car.

Industry analysts have frequently said that electric cars would not be profitable for years to come because of the high costs associated with the vehicles batteries.

"We've been working in lithium ion car batteries for 17 years," Perry said. "So all that advanced research and engineering work we've [already] paid for."

The Leaf and Volt are not quite directly competitive, although both are electric battery cars. The Leaf is an all-electric car with an around-town driving range of about 100 miles. The Volt has a range of only 40 miles, enough for a typical days driving, but it also has a gasoline engine to generate electricity for further driving up to about 300 miles.

Nissan had previously said that it expected to price the Leaf competitively to similar gasoline-powered cars such as a well-equipped Honda Civic.

The Leaf's standard features will include navigation and Bluetooth telephone connectivity, said Perry.

Nissan already has a list of more than 80,000 people who have expressed interest in the Leaf, Perry said. And in coming weeks, Nissan will begin taking refundable $99 deposits for the car.

Those who submit deposits can have their homes inspected to make sure they have appropriate space and wiring to install a charging dock, Perry said. Nissan expects about half those expressing interest to submit a deposit, he said.

Nissan also expects many customers to lease the car. That way, they won't have to worry about filing or refiling their taxes go get the benefit since it will factored into the lease payments, Perry noted.

The car will lease for a $349 a month with an initial down payment $1,999.

"Our goal there was to get our total operating cost, vehicle, electricity charging station, all in, around $400 a month," Perry said.

In some states there are also state incentives for the purchase of an electric car. In California, for example, there is a $5,000 credit which would reduce the cost to just over $20,000, Perry said.

Nissan has partnered with an outside company, AeroVironment, to install home chargers for the car. Installation of the charger will typically cost $2,200, Perry said, but there is a tax credit that will cover half the cost up to $2,000.

Toyota, Nissan Boost February Production on Asia, U.S. Demand

Bloomberg

Toyota Motor Corp., the world’s biggest automaker, Honda Motor Co. and Nissan Motor Co. increased global output in February on surging demand in Asia and amid a recovery the U.S.

Toyota’s production rose 83 percent to 655,180 vehicles from a year earlier, it said today in a statement. Output at Honda Motor Co., Japan’s second-largest carmaker, rose 49 percent to 284,711 units, and Nissan, the third-largest, built 270,366 vehicles, up 72 percent, the companies said separately.

Japanese automakers were buoyed by rising sales in China, Japan, and the U.S., where sales rose for a fourth month in February. Output plunged a year earlier amid a global recession.

Toyota increased production even as the company’s American sales dropped 8.7 percent in February, dragged down by recalls of more than 8 million vehicles since September for problems including unintended acceleration. Toyota’s U.S. production increased 70 percent to 84,184 for the month, it said.

This month, Toyota’s sales in the U.S., helped by an incentive campaign to counter the effects of the recalls, may report a 37 percent jump, according to Dave Cutting, senior manager of North American forecasting for J.D. Power & Associates.

The company is using no-interest loans and lease discounts in the U.S. to coax back buyers after sales dropped 12 percent in the first two months of this year.

China Production

Toyota more than doubled production in China, which surpassed the U.S. as the world’s biggest car market in 2009, to 56,397 in February, an increase of 136 percent. Industrywide sales of passenger cars, trucks and buses in the country rose 46 percent from a year earlier to 1.21 million vehicles.

It plans to increase capacity at a joint-venture plant with China FAW Group Corp. in Chengdu to 30,000 units from 13,000 units by June. The plant builds the Coaster and Land Cruiser Prado models.

The Toyota City, Japan-based carmaker also intends to build a second plant in Changchun, Jilin province, where it may make Corolla compact cars.

In Japan, sales at Toyota and other carmakers began recovering from a yearlong slide in August as government rebates and tax cuts for fuel-efficient vehicles helped rekindle demand. Toyota’s Prius hybrid was the best-selling car there in February for the ninth straight month.

Toyota shares fell 0.5 percent to 3,740 yen at the 3 p.m. close of trading in Tokyo.

U.S. Recovery

Honda’s U.S. production in February increased 62 percent to 76,646 as it benefited from the recovery in auto sales there. Edmunds.com estimates U.S. car sales will rise 31 percent in March from a year earlier, while Honda’s may gain 22 percent, the industry researcher said last week.

The Tokyo-based company increased China production 26 percent to 43,843 units. Honda’s local venture with Dongfeng Motor Group Co. said last month it will invest 1.15 billion yuan ($168 million) to build a second plant in China that will begin production in the second half of 2012. The factory’s target capacity for Honda-brand vehicles is 240,000 vehicles a year.

Honda will also increase production capacity at the venture’s existing plant in Hubei province to 240,000 vehicles this year, from 200,000.

Nissan increased February production in Japan by 121 percent to 97,109 vehicles, including a tripling of exports to 50,279 units, the Yokohama-based automaker said. Its sales in China rose 34 percent to 58,323 units.

Ghosn Overruling Engineers on Battery Car Makes Lutz See Nissan Losing Bet‏

Bloomberg

The crowd of 600 falls silent as an employee asks Chief Executive Officer Carlos Ghosn if he’s staking too much of Nissan Motor Co.’s future on electric cars and not enough on green alternatives like Toyota Motor Corp.’s Prius gas-electric hybrid.

Ghosn steps to the edge of the stage at Nissan’s Yokohama headquarters and smiles, lightening the mood on a rainy October afternoon.

Hybrids, diesels and gas engines aren’t enough, Ghosn responds. In a world where oil prices may triple and political upheaval and climate change are intensifying, governments are promoting all-electric cars. Consumers will embrace them as soon as the price is right, he says.

“This is about preserving the planet,” Ghosn says, Bloomberg Markets magazine reported in its February issue. “If we start being skeptical, nothing is going to happen.”

A few minutes later, sitting sideways with his arm across the back of a chair in a conference room, Ghosn shifts from evangelist to micromanager. A Nissan ad that touts zero-emission motoring for future generations is vague, he tells a dozen executives.

“We should say specifically ‘young people, first-new-car buyer,’” he says.

Ghosn, 55, who turned Nissan into the most profitable of the world’s seven biggest automakers in 2005 and made Ghosn-san a Japanese household name, is placing the auto industry’s biggest bet yet on electric vehicles, or EVs.

Roadblocks Ahead

Ghosn is facing an abundance of challenges. It may take until 2030 for automotive batteries to be cheap enough for widespread commercial use, the National Research Council said in December. Before then, governments may tire of propping up the EV industry with tax breaks and buyer incentives.

Ghosn’s first electric car, the Leaf, can travel only 100 miles (160 kilometers) without recharging -- putting him in competition with hybrid vehicles that have no such limits.

The biggest stumbling block may be out of Ghosn’s control: the price of gasoline. His success -- or that of anyone who builds EVs -- hinges on whether car buyers get fed up paying increasingly higher prices at the pump, says Jerome York, the former Chrysler Corp. chief financial officer who has advised billionaire investor Kirk Kerkorian. On Jan. 6, gasoline averaged $2.68 a gallon in the U.S.

“If gas is $2 a gallon, this whole regulatory effort to promote EVs is going to be an ugly train wreck,” York says.

‘Being Innovative’

Ghosn has won supporters.

“We look very positively on the fact that they’re being innovative and have a plan for EVs that it looks like they’ll be able to achieve,” says Gilles Michel, assistant director of the New Jersey Division of Investment, which began buying its 6.6 million Nissan shares in March 2009. Since then, the stock price has more than doubled.

The division, which manages investments for the state’s $68.5 billion pension fund, also owns 500,000 Renault SA shares.

Renault started buying what’s now a 44 percent stake in Nissan in 1999, when Ghosn was the French company’s executive vice president. Renault shares rose 59 percent in six months to 39.25 euros on Jan. 6. Ghosn has been CEO of both Nissan and Renault since 2005.

Michel also likes that Nissan and Renault shares were beaten down, because he expects a recovery in U.S. auto sales. From its 18-year high in January 2007, Nissan stock tumbled 82 percent in two years. In February 2009, Ghosn cut 20,000 jobs, or one in 12. In December, U.S. sales rose 15 percent from the year-ago period. On Jan. 6, Nissan shares traded at 799 yen, up 38 percent in six months.

Rebel Without a Cause

Ghosn needs a bold move to restore his brands’ luster. Nissan’s net income peaked in 2005 at $4.8 billion. Since that year, U.S. dealers have reported a sales drop of more than 75 percent for the Titan pickup. The truck was a centerpiece of the effort by Ghosn, a Brazilian of Lebanese descent who speaks four languages, to revive Nissan and challenge Detroit.

Ghosn expects Nissan to lose $445 million in the fiscal year ending in March 2010, adding to a $2.3 billion loss the previous year. Renault lost $3.6 billion during the first half of 2009.

As profit sank, analysts began questioning whether Nissan had an enduring identity, especially among young people, says Andy Palmer, Nissan senior vice president for product planning.

“You need to be a rebel with a cause, and we didn’t have a cause,” Palmer says.

Zero-Emission Mobility

Ghosn has found his calling. He’s going all out to populate the planet with electric vehicles, starting in December 2010 with the Leaf.

“We aim to be the global leader in zero-emission mobility,” Ghosn told employees in October.

The five-person car, which he’ll roll out first in the U.S. and Japan, will cost as much to buy and operate as comparable gasoline models, Ghosn says. These include Honda Motor Co.’s $24,000 Civic Si. Drivers will have to recharge the Leaf’s 475- pound (215-kilogram) lithium-ion battery pack after 100 miles.

Ghosn is upending a century of automotive tradition by selling the Leaf without a battery. Instead, owners will rent the battery pack and pay for the miles used, like a cellular phone plan.

Drivers will recharge at home or at public plug-in stations, hitching to 3-foot-high (0.9-meter-high) metal posts. Or they may swap the batteries, like exchanging an empty propane tank for a full one. The price: about $120 a month in the U.S. for battery rental and electricity.

‘Community of Buyers’

“I’ll be very surprised if there isn’t a large community of buyers,” says Daniel Kammen, director of the Renewable and Appropriate Energy Laboratory at the University of California, Berkeley, who helped the state design its low-carbon-fuel standards.

Ghosn is so sure the vision will work that he’s building factories to assemble 500,000 EVs a year -- 10 times more units than General Motors Co. is planning to make of its Volt hybrid. The Volt, which GM says will go on sale in November, has a small gasoline engine that runs a generator to recharge the battery as needed.

For Nissan, Ghosn is planning a delivery van, sports model and two-seat urban commuter after the Leaf; for Renault, he’s looking at four EVs, including a one-seater similar to a motorcycle.

Ghosn predicts that EVs will grab 10 percent of worldwide industry sales by 2020. He has pledged to spend $6 billion on EV technology from 2007 to 2011 -- an amount equal to the combined annual research and development budgets at Nissan and Renault.

Not Much Fun

As for his companies’ recent losses, “has it been fun for anybody, you think, for the last two years?” Ghosn asks, referring to the financial crisis during a November interview at the Council on Foreign Relations in New York.

Worldwide auto sales were forecast to be 55.2 million in 2009, 23 percent below a mid-2008 forecast from research firm R. L. Polk & Co.

Investor Harris Kempner isn’t waiting to see whether Ghosn’s EV push derails. The CEO of Kempner Capital Management Inc. in Galveston, Texas, sold his 404,296 Nissan American depositary receipts in the quarter ended on Sept. 30.

“There’s plenty of room for improvement in gas engines that don’t require new infrastructure,” Kempner says.

For Rod Lache, a Deutsche Bank AG analyst in New York, the cost of electric vehicles’ battery packs is a major constraint. A pack as big as the Leaf’s costs $15,600, Lache says. That compares with about $30 for a gas tank in conventional cars that travel four times farther.

‘Massive Losses’

Eric Noble, president of research firm The CarLab in Orange, California, says the metals used in batteries are getting more expensive. In 2009, lithium carbonate cost $6,500 a metric ton, almost triple 2006 prices, according to the U.S. Geological Survey.

“The result will be massive losses,” Noble says of Ghosn’s EV effort.

Bill Reinert, Toyota’s U.S. manager for advanced technology who helped design the Prius, says range is a major detraction for electric vehicles.

“One hundred miles covers most daily trips but not all,” he says. “How many people can afford a specialized car that can’t be used on vacation?”

Toyota’s planned all-electric car, set to make its debut in 2012, is a four-seater designed for commuting. It will go at least 50 miles without recharging.

Ghosn’s Alliances

Ghosn says the Leaf’s range will satisfy most drivers. He’s signed agreements with 41 governments and utilities -- from Portugal to Portland, Oregon, to the prefecture of Kanagawa near Tokyo -- to build recharging stations as part of their plans to curb greenhouse gases and cut dependence on petroleum.

Even so, EVs may not provide the same environmental benefits in all countries. U.S. reliance on coal, a polluting fossil fuel, for half of its electricity needs taints EVs’ green credentials, says Jan Kreider, an engineering professor at the University of Colorado, Boulder.

An EV with a 40-mile range will emit 110,000 pounds of carbon dioxide equivalents during its lifetime because it relies partly on coal as the original energy source, Kreider says. Toyota’s Prius will emit 97,000 pounds, and Nissan’s gas-powered Sentra compact will put out 140,000 pounds.

Ghosn says that once EVs arrive in showrooms, companies will invest in nuclear, wind and solar energy to create cleaner electricity.

Building Batteries

For now, his success turns on batteries. Ghosn plans to build them through Automotive Energy Supply Corp., which Nissan owns jointly with NEC Corp., Japan’s biggest personal computer maker.

NEC has a 1 percent market share for lithium-ion batteries, says Menahem Anderman, president of technology consulting firm Advanced Automotive Batteries in Oregon House, California. NEC trails Samsung Electronics Co., Sanyo Electric Co. and Sony Corp., each with 10 percent market share or more, he says.

Batteries are harder to build for cars than computers, Anderman says. That’s because they require high voltage and a long life and are more sensitive to variations in manufacturing.

“AESC has produced less than 1,000 EV batteries, and its testing of durability for a 10-year automotive life cycle is at an early stage,” he says. “Talking about producing 500,000 batteries a year is quite premature.”

‘Rolling the Dice’

Lache predicts that high-volume manufacturing will cut battery costs -- now $650 per kilowatt-hour -- in half by 2020. Ghosn says costs will fall faster. He’s working on batteries with twice the range of Leaf’s and has teamed up with Sumitomo Corp. to sell used batteries that can no longer withstand automotive requirements but can store power for utilities.

GM Vice Chairman Bob Lutz says their limited range puts all-electric vehicles years from widespread adoption.

“He’s rolling the dice,” Lutz, 77, says of Ghosn’s battery-only tack. “I don’t see it happening.”

Until the early 1900s, when Texas gushed with cheap oil, electric cars were about as popular as gas models. A century later, as governments and consumers struggle to cut fossil fuel use, EVs may be coming back.

Portuguese Prime Minister Jose Socrates has pledged to use them for 20 percent of government transportation needs, build 1,350 public recharging stations by 2011 and give buyers tax credits and subsidies of more than 8,000 euros ($11,518).

‘Three Oil Shocks’

“I’ve seen three oil shocks,” says Socrates, 52, whose country of 10.6 million has no commercial coal or oil production. “It’s not possible to live through these situations and do nothing.”

In recent decades, Nissan has made its name with the Z and Skyline GT-R sports cars. Yet the company has had a team investigating lithium-ion technology for almost two decades as it has braced for rising oil prices.

Even as Nissan shuttered factories in 1999, it continued battery work. In 2006, Ghosn overruled Nissan’s researchers and approved high-volume EV manufacturing.

“The engineers will always tell you, ‘Wait a little more,’ and if you keep playing this game, you never launch any product,” he says.

By the time Ghosn attended the World Economic Forum in Davos, Switzerland, in January 2007, he was a full-blown EV booster.

He met Shimon Peres, the Israeli vice prime minister who’d become an EV advocate because of his country’s limited oil. Peres brought Shai Agassi, the Israeli-born founder of Better Place, a Palo Alto, California, company that builds and operates networks of recharging stations, to a meeting at Peres’s hotel.

‘I’ve Got Your Car’

As the two pitched EVs, Ghosn said he didn’t need to hear it.

“I’ve got your car,” Ghosn said, Agassi recalls. “Let’s do it.” Peres, who is now Israel’s president, declined to comment for this story.

Ghosn agreed to build 100,000 electric vehicles to be recharged by Better Place in Israel and Denmark. Peres slashed import taxes on EVs to 10 percent compared with 83 percent for gas models. Agassi is building 500,000 recharging stations where drivers use credit cards or mobile phones to pay.

In August, Ghosn drove a sky-blue Leaf onto the stage at Nissan headquarters with former Prime Minister Junichiro Koizumi riding shotgun.

“It was so unexpectedly smooth and quiet,” Koizumi said. “I am sure this car is going to be popular.”

‘Superb Executive’

Toyota’s Reinert isn’t convinced. He says EVs could experience a five-year bubble, like solar panels during President Jimmy Carter’s term in the late 1970s. If budget cuts force governments to end subsidies, only a handful of EVs could be left standing in the market, he says.

Ghosn says competitors are trailing Nissan in EVs, so naturally they’re going to play down the technology’s prospects.

“They cannot say, ‘we’re forecasting a 10 percent market share for EVs and, by the way, we have nothing,’” he says.

Ghosn is spreading his electric gospel. “He’s a superb executive and works beyond belief,” York says.

Ghosn says he’s waiting for the right time to talk with U.S. carmakers about alliances that would support investments in zero-emission vehicles, aiming to get everybody behind his quest to use EVs to tackle climate change.

Businessmen must advocate policies that alter societies, Ghosn says, noting that oil prices could suddenly shoot up to $250 a barrel from $82.36 on Jan. 6 and nobody would be prepared.

“It’s about having a road map to avoid this continuous discussion about the disaster looming on us in the next five or 10 years,” he says.

It’s also about whether history remembers Carlos Ghosn as a Henry Ford, whose vision shaped the modern auto industry -- or as an automotive rebel who found a cause the world wasn’t ready to embrace.

Tesla, Ford, Nissan To Get $8B Federal Loan For Green-Car Development

Story from Mercury News


DEARBORN, Mich. — The Energy Department said today it would lend $5.9 billion to Ford Motor and provide about $2.1 billion in loans to Nissan Motor and Tesla Motors, making the three automakers the first beneficiaries of a $25 billion fund to develop fuel-efficient vehicles.

Energy Secretary Steven Chu announced the loan recipients at Ford's Research and Innovation Center in Dearborn.

Tesla, based in San Carlos, would get $465 million in loans to build electric vehicles and electric drive powertrains in California. The company will use $365 million for production engineering and the assembly of the Model S sedan, an all-electric vehicle that is expected to travel up to 300 miles per charge and go on sale in 2011. It will use $100 million for a powertrain manufacturing plant expected to employ 650 workers.

Tesla CEO Elon Musk said the automaker would use the loan "precisely the way that Congress intended — as the capital needed to build sustainable transport.

The loans to Ford will help the company upgrade factories in five Midwest states to produce 13 fuel-efficient vehicles.

Nissan was receiving $1.6 billion to retool its plant in Smyrna, Tenn., to build advanced vehicles and build a battery manufacturing facility.

The loans were designed to help auto manufacturers meet new fuel-efficiency standards of at least 35 mpg by 2020, a 40 percent increase over current standards.

"These loans will help the auto industry meet and even exceed the president's tough fuel standards," Chu said. "This is part of President Obama's commitment to a new energy strategy for America. ... This means the most fuel-efficient cars in the world must be made right here in America."

Dozens of auto companies, suppliers and battery makers have sought a total of $38 billion from the loan program, which was created last year to provide low-interest loans to car companies and suppliers retool their facilities to develop green vehicles and components such as advanced batteries.

Ford had been seeking about $5 billion in loans by 2011 and a total of $11 billion from the program to invest $14 billion in advanced technologies over the next seven years. The company said it will transform plants in Illinois, Kentucky, Michigan, Missouri, and Ohio.

Ford CEO Alan Mulally said in an interview with The Associated Press that the department approved the company's entire proposal through 2011 and it would help Ford meet the new fuel efficiency standards.

"This is a tremendous development," Mulally said.

He said the loans would help Ford further its strategy to build a wide range of fuel-efficient cars.

"We want to be in every market segment in the U.S.," Mulally said. "Every year forever we want to continue to improve fuel efficiency."

Ford expects to begin repaying the loans in 2012, with an interest rate based on the current U.S. Treasury rate hovering between 3 and 4 percent, said Ford spokesman Mike Moran.

"If it were at market rates it would be in the double digits," he said. "That's a huge thing for us."

Ford can draw from the loan for work done to retool its plants going back to late last year, Moran said. The plants must build cars that improve fuel efficiency by 25 percent.

General Motors Corp. and Chrysler Group LLC have received billions of dollars in federal loans to restructure their companies through government-led filings for bankruptcy protection, but Ford avoided seeking emergency aid by mortgaging all of its assets in 2006 to borrow about $25 billion.

Mulally said the loans Ford would receive from the Energy Department were part of a government-industry partnership and "had nothing to do with the emergency loans to keep General Motors and Chrysler in business."

Ford has said it intends to bring several battery-electric vehicles to market. The automaker has discussed plans to produce a battery-electric vehicle van in 2010 for commercial use, a small battery-electric sedan developed with Magna International by 2011 and a plug-in hybrid vehicle by 2012.

General Motors has requested $10.3 billion in loans from the energy program, while Chrysler has asked for $6 billion in loans. Energy officials have said the loans could only go to "financially viable" companies, preventing GM and Chrysler to qualify for the first round of the loans.

Elizabeth Lowery, GM's vice president of environment, energy and safety policy, said GM still must pass the Energy Department's financial viability test before it can receive loan funding and the company hoped to get the money shortly after it emerges from Chapter 11 bankruptcy protection.

Chu said the Energy Department has started discussing details of the loans with Chrysler and has begun reviewing the "technical side" of the loan requirements with GM.

Nissan said the $1.6 billion loan would be used to modify its Smyrna, Tenn., plant to produce zero-emissions vehicles and lithium-ion battery packs to power them. The Japanese company has previously outlined plans to develop an all-electric car with 100 miles of pure battery range for release in late 2010.

"This loan is an investment in America. It will help us put high-quality, affordable zero-emissions vehicles on our roads," said Dominique Thormann, Nissan North America's senior vice president for administration and finance.