Ford, the only major US automaker not on federal aid, is ambitious and aggressive with its green plans. Bloomberg News

DETROIT: Ford Motor Corp said it is prepared for the new national tailpipe emissions requirements that US President Barack Obama recently announced.

"Ford is ready to live up to the high standards," said Kenneth Hsu, Ford's global communications manager.

The nationwide standards will force automakers to dramatically boost fuel efficiency (all vehicles must be able to average 35 miles per gallon) by 2016.

The new regulations will go into effect for 2012 models, with slightly lower efficiency standards, which will be raised each year until 2016.

Ford, the only major US automaker not on federal aid, is ambitious and aggressive with its green plans.

Its factory in Brook Park, Ohio, is now producing a new line of fuel-efficient EcoBoost engines that will be standard on the Ford Taurus SHO and operational on the Lincoln MKS and MKT and on Ford Flex cars.

"The EcoBoost engines will be installed on more than 90 percent of Ford vehicles sold in the US by the year 2013," Hsu said.

Ford said its 3.5-liter, V-6 EcoBoost engine can achieve 20 percent better fuel economy and 15 percent lower carbon dioxide emissions without sacrificing any power.

The auto giant is also retooling its aging truck plant in Wayne County, Michigan to build an all-electric vehicle based on a redesigned Ford Focus sedan.

"We are modernizing our Wayne factory complex on the new state-of-art manufacturing plant in Nanjing, China," said Hsu.

Ford launched its China joint venture, Changan Ford Mazda Automobile in Nanjing, Jiangsu province in 2004. The plant produces small-car models for both the Ford and Mazda brands.

Highly flexible, automated production lines and an advanced environmentally-friendly paint process at the Nanjing plant will be available for the Wayne factory, which is due to open for production in the second half of next year.

The White House's new bill will cost automakers $1,300 per vehicle, which, depending on sales, could total $13 billion to $20 billion a year.

Congress is planning to offer the automakers help. A revised version of an energy bill, released late Monday, doubles (to $50 billion) an Energy Department program offering low-cost retooling loans to automakers and parts producers.

It will also allow manufacturers to apply for government assistance in producing plug-in hybrids and even seek money to buy the expensive batteries used in such vehicles.

Ford, General Motors, Chrysler, Nissan Motor Co and Tesla Motors Inc had applied earlier for funds under the program.

The amount of loans they will get will be announced in a month.

But the beleaguered Chrysler, which is restructuring under bankruptcy protection, is no longer eligible for the loans. The government aid is only for financially viable companies.

GM's application is also questionable since the auto producer is facing a June 1 bankruptcy deadline. Its latest restructuring proposal calls for giving the government a 50 percent stake in the company in exchange for debt forgiveness, with an additional 39 percent going to the United Auto Workers for relief on pension and healthcare obligations. This leaves only 10 percent for bondholders - those who are supposed to be first in line to collect any assets. The existing shareholders will be left with 1 percent. Analysts say bondholders will laugh off the offer, making bankruptcy a certainty. They will get more of their money back that way.

The enlarged loan program may be a rare bright spot for auto parts companies, which have had little to cheer about recently.

Many of the nation's roughly 5,000 suppliers have been hit as GM, Chrysler and Ford reduced production because of falling sales. Some 20 auto suppliers have filed for bankruptcy this year.

"About 50 percent of the suppliers' production capacity is idle," said Neil De Kocker, president and CEO of the Original Equipment Suppliers Association in Troy, Michigan.

"In the next two months it will hit 60 percent," he said.

Chrysler plans to stop production at its North American factories until its sale to Italian automaker Fiat Group SpA is complete and GM has decided to suspend production at its own plants in the US and Mexico for as long as 11 weeks, starting later this month.

But top parts suppliers such as Eaton, Honeywell and Alcoa should be optimistic about their survival thanks to the government loans. The financial aid will help these companies adapt to the auto industry's green shift.

Obama's announcement on tailpipe emissions is also a roadmap for the auto industry, according to Ford's Hsu.

Before the announcement, California and 13 other states were trying to establish their own standards. Obama's plan will make those standards a national benchmark.

"Car companies gain a simpler and more predictable regime," said Hsu.

Tax on carbon emissions collected from auto companies will likely go into a pool of capital to support the auto industry's fuel-efficient vehicles.

The new rules should force the companies to shift to making smaller vehicles.

But, with gas prices low in the US, government aid alone is not enough to encourage green vehicles, said Gary Witzenburg, a former GM public relations worker who was involved with the ill-fated EV1 (the first electric car from a major automaker).

Witzenburg recommended gasoline prices be raised to push consumers away from big vehicles and toward hybrid cars.

"But that is politically impossible for the Obama administration," said Witzenburg.

Daniel Howes, a Detroit News columnist, did not welcome the new policy.

"Nowhere was there a prediction that an Obama White House would facilitate the bankruptcies of two-thirds of Detroit Auto, which it has. Or that it would broker the killing of brands, the closing of factories, the apparent reordering of federal bankruptcy law or the importation of new production from Mexico and China instead of metal coming from Canada," he said.

(China Daily 05/25/2009 page9)