GM Funds for Volt on Hold Pending Bailout.

The Chevrolet Volt





General Motors said it won't get federal funding for its Chevrolet Volt plug-in hybrid car until the company is certified as financially viable by the Obama administration.

The automaker has applied for $10.3 billion in U.S. Energy Department loans for development of fuel-efficient vehicles.

Included is a request to help develop the Volt's powertrain components, GM spokesman Kerry Christopher said in an interview today. He wouldn't say how much money GM sought for this purpose.

As part of the $10.3 billion application, GM also has requested $2.6 billion for development of two Volt derivatives, a third hybrid model and components, Christopher said.

"Any lack of funding they were counting on is likely to be very serious for the projects it's connected to," said Bruce Harrison, an IHS Global Insight analyst. "The company is fighting for its life and needs every dollar it can get."

President Barack Obama rejected GM's and Chrysler's business plans on March 30, giving GM 60 days and Chrysler 30 days to come up with more viable turnaround programs. If the companies fail to do so, Obama held out the possibility of bankruptcy.

Missing the boat?

For GM, that means White House certification of its financial viability won't take place until June 1 at the earliest.

But in May, the Energy Department will start approving the first of $25 billion in loans to automakers and suppliers for development of fuel-efficient vehicles, Energy spokeswoman Stephanie Mueller said today.

The funding was provided in Section 136 of the 2007 Energy Independence and Security Act, enacted to increase fuel-efficiency standards.

GM said any delay in federal funding won't affect plans to start selling the Volt next year.

"The Volt continues to be one of our highest priorities among all GM's future product programs and remains on track for a November 2010 launch -- with or without a Sec. 136 award," said GM spokesman David Darovitz.

But an analyst suspects that, without the federal loan, GM may transfer money from the rest of its vehicle fleet to subsidize the Volt and its derivatives.

"That would be a mistake," said Rob Kleinbaum, managing director of RAK & Co., a consulting firm in Ann Arbor, Mich. "The Volt won't be commercially successful for quite some time. By robbing Peter to pay Paul, they'd be undermining their bottom line."

Chrysler programs

Chrysler is seeking about $8 billion to help develop ENVI electric vehicles and other technologies, a company spokesman said.

"Our understanding is that our DOE application is still pending as we work closely with all constituents and government agencies," the spokesman said in an e-mail.

Ford Motor Co. has not applied for a federal bailout, and its Energy Department funding has not been delayed for lack of financial viability.

The company has applied for $5 billion in Energy Department loans by 2011 to fund engine turbocharging technology aimed at increasing fuel efficiency and reducing greenhouse gases, said Ford spokesman Mike Moran.

Source: Automotive News