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GM Says "No Thanks" To Department of Energy Loans After All

By Jim Henry

Updated on: February 4, 2011 / 6:14 PM EST / MoneyWatch

In a sign of better times for General Motors (GM), and perhaps mindful of persistent criticism for GM taking a government bailout in 2009, GM last week withdrew its $14.4 billion loan application from the Department of Energy.

The money was to be used toward developing more fuel-efficient technologies, especially electric vehicles. GM, which recently introduced the industry's first plug-in hybrid car, the Chevrolet Volt, said it will continue to develop fuel-efficient cars on its own.

"This decision is based on our confidence in GM's overall progress and strong, global business performance," said Chris Liddell, GM vice chairman and chief financial officer, in a written statement. "Withdrawing our DOE loan application is consistent with our goal to carry minimal debt on our balance sheet."

Does GM even need the help?
GM had a net profit of $4.2 billion for the first nine months of 2010, so it's debatable whether GM needs the help. Its workforce is still much smaller than it was a few years ago, but since 2009 the company says it has added back several thousand jobs, mostly towards developing alternate-fuel vehicles and other technologies aimed at greater fuel efficiency.

Meanwhile, rival Ford (F) earlier got $5.9 billion in DOE loans. That's a little ironic, since Ford has been getting pats on the back for avoiding bankruptcy in 2009 and for not taking taxpayer money.

To be fair, Ford's $5.9 billion in DOE loans is a lot smaller than the $76 billion investment the U.S. Treasury made to bail out GM, Chrysler and then-GMAC, now Ally Financial. Still, it's not like any of the big car companies is too noble to accept government help.

Nissan (NSANF.PK) also got $1.6 billion in DOE loans, toward producing electric cars and battery packs at its manufacturing complex in Smyrna, Tenn. The first model to be built there will be the battery powered Nissan Leaf, which also debuted recently. Until the Tennessee plant comes on line in 2012, the first Nissan Leaf units to be sold in the United States are imports.

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Photo: GM