Ford wants government money, too.

Posted by: David Welch on January 15, 2009

To hear Ford tell the story, the Dearborn (Mich.) company is the smart one that is getting its house in order and doesn’t need government loans like more troubled rivals General Motors and Chrysler. That’s mostly true. Ford borrowed enough in the open market before the credit markets froze up. But to say that Ford isn’t seeking a big chunk of Federal funds is a bit misleading.

Right now, Ford has says its future product programs qualify the company for up to $11 billion of the DOE’s $25 billion program. The company figures it may only get about $5 billion, though. GM wants $8 billion from the DOE loan program, which extends credit for projects resulting in better fuel economy. It can be advanced vehicles like the Chevrolet Volt electric car or to tool up plants for more prosaic fuel sippers like the Chevy Cruze compact. Others are seeking funds, too. Even tiny Tesla Motors wants $450 million from the DOE.

Adding in the $13.4 billion or more that GM needs from the Treasury Department to stay afloat and its borrowings are much more. The company will eventually be heavily indebted to the federal government. But Ford clearly needs a boost, too. And it’s no wonder. Not only are the new fuel economy regulations forcing automakers to retool many of their models, Ford has plenty of cash problems. In the third quarter, Ford burned $7.7 billion in cash while GM burned $6.9 billion. For the first three quarters of last year, Ford burned through $15.7 billion while GM went though $14.1 billion.

Developing new models and technology is a massive expense for carmakers. If the DOE agrees that many of Ford’s future models qualify for the program, it could end up borrowing more from the DOE than GM under the program. Bottom line: Ford’s problems are less urgent than GM’s issues. But let’s curb our enthusiasm a bit.

Reader Comments

Stan Wellaway

January 15, 2009 7:32 PM

"..Developing new models and technology is a massive expense for carmakers.."

All the more reason for the mainstream carmakers to partner with established niche players whose product is already in play. Ford have worked very closely with Smith Electric Vehicles for over a year - helping develop what is now a comprehensive range of electric vans which already carry a Ford badge on the nose, and which are already out there on the highways and city streets in Europe. Check out the Case Studies page at the Smith EV website http://www.smithelectricvehicles.com

Bringing vans and trucks into fleet use allows quantity orders, helping justify increased battery production, which in turn brings down prices for car batteries. And there is already a fully windowed fully seated car version of the Ford Transit Connect. That's the vehicle on which the Smith Ampere is based. In 7 weeks time, at the Work Trucks show in Chicago, Ford will be unveiling their promised electric van for 2010. Shareholders in Tanfield Group (the UK owner of Smith EV) are increasingly confident that the Ford van will be a rebadged Smith product.

Brian

January 16, 2009 1:55 PM

Thanks for Driving a North American Built Vehicle.

Don

January 17, 2009 10:46 PM

Wonder when Toyota, Nissan, etc, etc will ask for government assistance? They do build cars here, wouldn't that be fare compitetion? if we dont could that involve international fare trade issues?

John

January 28, 2009 5:52 PM

Ford is currently blowing a chance to thrive in sales in America. The Econetic would sell like hotcakes here, yet all the talking heads say Americans would reject diesels....How the hell do they know? There hasen't been a viable one for sale in passenger cars. I think most Americans have forgotten the rediculous attempts by Ameican automakers of foisting gas/diesel conversions on us. Todays diesels are faster, lighter, economical, quieter, easier to start in all weather, smoother, and take less maintenance. Soon Toyota or Honda will see the market potential, and Ford will say "We need the bailout money. We never saw it coming."

Car

July 5, 2009 3:55 AM

Ford - the remarkable car. I have Ford Escape

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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