DoE rejects grant applications; Senator says Chrysler wants money so Cerberus can sell it

Posted on December 4th, 2008 • by Bill Cawthon

The U.S. Department of Energy has turned down the applications from Chrysler, Ford and General Motors for grants under the $25 billion Advanced Technology Vehicle Incentives program approved in September as part of the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009.

At a Congressional hearing, Senator Bob Corker, a Tennessee Republican, said that Energy Secretary Samuel Bodman informed the car companies the Department was rejecting the applications because of lack of documentation.

The automakers had requested more than $16 billion from the fund, which is earmarked for development of more fuel-efficient vehicles and retooling factories to produce them. GM had applied for $3.6 billion for its Volt program; Ford requested $5 billion and Chrysler wanted $8.5 billion.

During the hearings, Senator Corker also challenged Chrysler’s request for federal funds, saying the company only wants the money to keep it going until Cerberus Capital Management can unload it.

“It troubles me to know we’re providing enough capital to help you stay around long enough to get married,” said Corker, who claimed an unidentified Cerberus board member told him the investment firm had acquired Chrysler and GMAC for their finance operations and that the auto business was a “bonus.”

Corker also said Cerberus has plenty of cash but is unwilling to put it into the automaker. Corker went on to charge that Chrysler had not invested in future product programs or technology. “There’s no future for the company as a stand-alone,” he said.

Chrysler CEO Bob Nardelli, who was at the hearing, quickly challenged Corker’s comments, saying: “I don’t agree with that.”

In the plan Chrysler submitted to Congress, the company outlined plans for two dozen major product launches by 2012 and is developing new technologies, including electric vehicles, for near-term introduction.

Senator Corker is from Tennessee, home to Nissan’s North American headquarters in Nashville and a large, non-union Nissan facility in Smyrna. Volkswagen is building a new billion-dollar assembly plant in Chattanooga. There is also a unionized General Motors plant in Spring Hill, which was originally the assembly plant for Saturn. It now builds the Chevrolet Traverse.