U.S. automakers might soon receive a big cash infusion from the federal government to retool factories for the production of more fuel-efficient vehicles.
Automakers have been lobbying for $25 billion in low interest loans, authorized (but not funded) by Congress last year in a sweeping energy bill.
On Wednesday, the house approved the funding as part of a much larger spending bill, which will now go to the Senate, where it is expected to be approved and passed to the White House for signing before Oct. 1, according to Reuters.
The automakers are insisting the loans are not a bailout. General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler said they would survive without the loans, but that tens of thousand of jobs would be at risk.
In addition, the companies say they need access to funds in order to reach energy efficiency goals set by Congress last year.
But some analysts say Congress is acting now to avoid a bailout down the road. The last time the federal government intervened in the U.S. auto industry was in 1980, when $1.2 billion in loan guarantees were given to Chrysler.
The Department of Energy will administer the current loan program, which is also open to foreign auto manufacturers. However, these companies are not expected to apply for loans, according to Reuters, as they already lead the American companies in shifting to more fuel efficient vehicles.
U.S. automakers originally asked for an additional $25 billion, for a total of $50 billion, but backed away from this request when it met opposition from lawmakers.
In addition to loans, the Senate approved on Tuesday a measure in a tax bill that would give consumers a credit of up to $7,500 for buying a plug-in electric car. This bill has yet to be approved by the House.
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