updated 9/12/2008 3:58:29 PM ET 2008-09-12T19:58:29

General Motors Corp.’s chief executive on Friday urged Congress to provide funding for a $25 billion loan program and give flexibility to the auto industry to use the money to improve fuel efficiency.

GM Chairman and CEO Rick Wagoner asked lawmakers at a Senate energy summit to fund a provision in last year’s energy bill to allow the loans to be extended and to draft regulations for the program.

“If that is done, then I think the $25 billion included in the energy bill last year would be very helpful in enabling the industry to move more rapidly,” Wagoner said.

Sen. Bill Nelson, D-Fla., said the incentives to retool the industry were necessary, but expressed doubts that it would be enough to help the industry’s long-term financial future.

He criticized Detroit automakers for traditionally opposing increases in fuel economy standards.

“That’s not going to be enough,” Nelson said. “You all are going to come to us with some kind of rescue package and ask us to rescue you.”

Wagoner said they simply were asking for the program to be funded.

“I’m not here today ... asking for any bailouts,” he said.

Wagoner also asked for additional flexibility in receiving the loans so it could be applied to a broad range of fuel-efficient vehicles, not just those vehicles that would get a 25 percent increase in fuel efficiency, as the legislation suggests.

Video: Ford Motor Co. looking ahead

Industry officials and Michigan lawmakers had discussed building support for up to $50 billion in loans over three years, but Wagoner told reporters they would seek $25 billion to help pay for the modernization of plants and the development of fuel-efficient vehicles.

“That is the entire focus of our efforts, he said.

GM is developing an extended-range plug-in electric vehicle called the Chevrolet Volt, which it hopes to launch in 2010. The vehicle is heavily dependent upon advanced battery technologies, which could be helped by the loans.

Congress authorized $25 billion in loans in last year’s energy bill but has not funded the program. The loan program was intended to help the industry meet new fuel economy standards of at least 35 miles per gallon by 2020, a 40 percent increase.

GM, Ford Motor Co., and Chrysler LLC have been working to secure funding in below-market rate loans over amid a sluggish economy, tight credit market, and high gasoline prices.

The government interest rate for the loans would be around 5 percent, providing about $100 million a year in savings for the companies for every $1 billion in loans. With poor bond ratings, the Detroit companies would only qualify for double-digit interest rates on the open market.

Ford CEO Alan Mulally said in an interview Friday with CNBC that the company was “very encouraged with the response that we’re getting on the energy bill and also this enabling technology they put in. So, I think we’re going to move forward with it.”

Chrysler LLC Vice Chairman Jim Press, at an event to celebrate the factory launch of new Dodge Ram pickup truck in Warren, Mich., said the loans would get new technologies to customers faster in order to reduce oil consumption and carbon dioxide emissions.

He also said the loans would encourage companies to make U.S. investments in new technologies such as batteries to power vehicles.

“One of our problems is we’re dependent on foreign sources of oil,” Press said. “We don’t want to be dependent on foreign sources of batteries.”

Senate Majority Leader Harry Reid, D-Nev., said earlier Friday that he would do “everything that I can” to secure funding for the program “as soon as possible, hopefully this year.”

The loans have drawn questions from some consumer and environmental groups, who have called the loans a bailout and argued that the companies brought the problems upon themselves by producing large sport utility vehicles during the past decade and lobbying against higher fuel efficiency standards.

Industry leaders say the loans are not a government bailout because it would speed up production of fuel-efficient vehicles and reduce dependence on imported oil.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 2.79%
$30K home equity loan FICO 5.78%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.57%
13.57%
Cash Back Cards 17.91%
17.91%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com