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Washington — The U.S. Energy Department will announce Thursday it plans to loan aluminum producer Alcoa Inc. $259 million to expand production of lightweight materials for vehicles at its Tennessee plant, the first new award from the $25 billion program in four years.

The award is a major milestone for the beleaguered auto retooling loan program created by Congress in 2007 that last issued a loan in March 2011. The Detroit News learned details of the loan before the announcement from both Alcoa and the Energy Department.

The department announced a "conditional commitment" for the Alcoa loan, but hasn't formally closed yet. If completed, it would mark the first loan to an auto supplier.

Energy officials say they expect the Alcoa loan won't be the last from the Advanced Technology Vehicles Manufacturing program. Officials said a number of other applicants and potential applicants that include well-known established firms are in the pipeline. Most are in the sector of creating lightweight technologies. Loans could go to supplier firms making lightweight interior components and advanced steel. Those loans could help support thousands of jobs in auto-intensive states like Michigan.

In a Detroit News interview, Energy Secretary Ernest Moniz said the department has been in "very, very active early-stage discussions with potential applicants." He said more loans may be forthcoming, declining to say how many current applicants the program is reviewing, but saying the government is "getting a lot of interest."

"I think we're on the right track," Moniz said, adding the auto loan program "is running on all cylinders. ... We are going to be very aggressive in terms of good projects — we're going to try to move them out." He emphasized the program is still accepting applicants and said he wants to be "on the offense" in providing new loans.

The administration's support for the project comes as automakers race to add more aluminum components to meet sweeping fuel-efficiency requirements. Moniz said low gas prices have prompted an uptick in SUV and truck sales, but aluminum vehicle bodies let drivers opt for larger vehicles that are more efficient.

"We have the (fuel efficiency) standards that are coming into play in any case to drive the technology in that direction," Moniz said, referring to the landmark fuel-efficiency standards that the administration and automakers agreed to in 2011. Those standards will double fuel efficiency to a fleetwide 54.5 mpg by 2025.

Ford Motor Co. is assembling its new 2015 F-150 with a mostly aluminum body. Jaguar Land Rover next week will show off an aluminum-intensive 2016 Jaguar XF sedan; it will be 75 percent aluminum and be as much as 265 pounds lighter.

"Alcoa's innovative, high-strength aluminum solutions are leading the light-weighting revolution now happening in the automotive industry," said Klaus Kleinfeld, Alcoa chairman and CEO. "Alcoa is pleased to be part of the government's program to encourage a greater shift to aluminum intensive vehicles that are safer, lighter and more fuel-efficient."

Alcoa spokeswoman Lori Lecker said the loan will support its previously announced automotive expansion in Alcoa, Tennessee, which is scheduled to be complete in mid-2015. The Tennessee plant produces aluminum for the F-150.

Sen. Lamar Alexander, R-Tenn., praised the announcement.

"This is good news for Alcoa and Tennessee," said Alexander. "Today, more than one-third of Tennessee manufacturing jobs are auto related, and investment in advanced manufacturing is an important part of how our state will continue to attract good-paying jobs."

The auto retooling loan program was created by Congress in 2007 and funded in 2008. It hasn't issued a new loan in more than four years, even though it still has more than $16 billion in available low-cost government subsidized loans.

In April 2014, the Energy Department relaunched the program, making a new pitch to auto suppliers to convince them to apply. The department said then that eligible technologies included advanced engines and powertrains, light-weighting materials, advanced electronics and fuel-efficient tires.

In the case of Alcoa, the loan application had to demonstrate the aluminum was going to advanced vehicles that are more fuel-efficient.

The Alcoa application had been pending since 2013, so none of the applications received since the program was relaunched have been approved.

The program had some significant early success. In 2009, it loaned $5.9 billion to Ford, a key source of liquidity for the company at the time, and $1.4 billion to Nissan Motor Co. That helped support more than 35,000 jobs at the two companies.

It loaned $465 million to start-up electric vehicle maker a Tesla Motors Inc., which repaid its loans nine years early.

But loans to start-up automaker Fisker Automotive Inc. and Allen Park based-VPG went unpaid as both firms shut down.

Taxpayers lost $139 million on its $192 million loan to the failed EV startup Fisker and $42 million on its VPG loan to build wheelchair-accessible vehicles. AM General agreed to acquire VPG's MV-1 wheelchair-accessible vehicle program and a Chinese firm bought Fisker in bankruptcy.

The department halted making nearly all green-energy loans after the collapse of solar panel startup Solyndra LLC. Republican presidential candidate Mitt Romney repeatedly criticized two of the firms that got auto loans under the program — Tesla and Fisker — calling them "losers."

This month, House Republicans again proposed to kill the program and take back the remaining $4.2 billion that Congress has set aside to subsidize the remaining $16 billion in potential loans.

Moniz noted that Solyndra "cast a big shadow very early on, but frankly, by the time I got in here I felt the program was really getting on its feet." He said that fees collected from all of the government's green-loan programs are larger than the losses.

In recent years, automakers haven't shown a need for the program because of easy access to capital. By 2012, both General Motors Co. and then Chrysler Group LLC were among those who abandoned loan requests after years of talks with the department.

DShepardson@detroitnews.com

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