Ford's Green Partnerships with the Federal and State Governments

The 2007 Energy Independence and Security Act (EISA) continued the effort to transition the interactions between automakers and the government on fuel economy standards from an adversarial relationship to a partnership. EISA authorized tough standards for new vehicle fuel economy while creating the Section 136 Advanced Technology Vehicle Manufacturing Incentive Program. Section 136 authorized the Secretary of Energy to make direct loans to eligible applicants for projects that reequip, expand or establish manufacturing facilities in the United States to produce advanced technology vehicles or qualifying components and also for engineering integration costs associated with such projects.

Last summer, Ford Motor Company was the first automaker deemed by the government to be among the best companies with the best technologies in American manufacturing and fuel efficiency. This green partnership between Ford and the U.S. government will help to accelerate the development of advanced technologies for even better fuel economy while maintaining jobs in the United States.

In total, Ford is investing nearly $14 billion in advanced technology vehicles in the next seven years in the United States, and the advanced technology loans will help Ford achieve its ambitious goals for fuel-efficient vehicles and technologies. We expect to receive a direct loan of up to $5.9 billion through our partnership with the Department of Energy. This loan program was not part of the Troubled Asset Relief Program, the emergency taxpayer assistance provided to prevent ailing U.S. companies from going out of business. Instead it represents an affirmation of Ford's leading fuel-efficiency technologies and the beginning of a partnership with the federal government to advance these technologies more quickly.

An outstanding example of how Section 136 partnership funds are going to be used is the Ford Focus produced at the Michigan Assembly Plant (MAP). MAP is being transformed from a large SUV factory into a modern, flexible small car plant to produce the global Ford Focus. The new Focus will be one of up to ten unique models to be built from Ford's new C-car platform, which is expected to generate total sales in all regions of 2 million units annually by 2012. In addition to beginning production of the Focus this year at MAP, we will also produce the Focus Electric next year and next-generation hybrid and plug-in hybrid vehicles in 2012 at MAP.

The Focus exceeds Section 136's Advanced Technology Vehicle requirements by combining key technologies to achieve class-leading fuel economy, including: an advanced combustion engine, six-speed transmission, deceleration fuel shut-off, electric power-assisted steering, improved aerodynamics and lightweight materials.

Ford is investing approximately $550 million to introduce the North American market to Ford's global C-platform, which underpins the Focus. This investment will support more than 4,000 high-tech manufacturing and engineering jobs, not to mention more than 10,000 supplier jobs and 175,000 dealership positions.

Ford's sustainability commitments have received state government support as well. Working in close partnership with the state of Michigan, Ford received incentives and tax credits totaling $188 million to help in the continuous transformation of MAP. In addition to building the next-generation hybrid in Michigan, the incentives enabled Ford to bring advanced lithium-ion battery system design, development and assembly in house.

Ford also received a $2 million grant from the state of Michigan to install a large stationary battery-based energy storage facility with 750 kw capacity and 2 MWh of storage. This facility will support the state's "smart-grid" development initiatives as well as Ford's efforts to develop battery technology and secondary uses for vehicle batteries. As part of this facility, Ford will demonstrate the possibility for using vehicle batteries as stationary power storage devices after their useful life as vehicle power sources is over. Ford is participating in this project in partnership with DTE Energy, a Michigan-based energy provider. DTE Energy will install a 500 kw solar photovoltaic (PV) electricity generation system at the demonstration facility, which will produce some of the energy to be stored in Ford's stationary battery storage facility. When commissioned at the end of 2010, it is anticipated that it will be the largest PV array in Michigan. This solar PV system, which will feed into the battery facility, is being funded by DTE Energy to support Ford's sustainability efforts and to help the state of Michigan meet its renewable energy production requirements. As part of this project, Ford will also develop 10 electric vehicle charging stations, which will demonstrate advanced battery charging technologies and associated integration with renewable energy and other smart-grid advances.