General Motors Co has withdrawn its application for $14 billion in subsidized loans from the U.S. Department of Energy, saying it has the financial strength to fund investment in more fuel-efficient and electric vehicles on its own.
The move could provide a public-relations boost to GM, which has struggled to distance itself from the controversy of a $50 billion bailout and the stigma of having become Government Motors after being restructured in bankruptcy.
GM had initially seen the Department of Energy loan program as a potential source of financing that could stave off bankruptcy in 2008.
The automaker submitted its application for a low-interest loan under the program in October 2009, near the depth of the sharp downturn in U.S. auto sales.
This decision is based on our confidence in GM's overall progress and strong, global business performance, Ed Welburn, GM design chief, said in a speech at the Washington auto show.
Withdrawing our (Department of Energy) loan application is consistent with our goal to carry minimal debt on our balance sheet.
Shares of GM gained 1.3 percent to $38.37 in morning trade on the New York Stock Exchange. The stock has gained 16 percent since its November initial public offering.
Separately, GM also said it would begin to sell its plug-in hybrid Chevrolet Volt in all U.S. states by the end of 2011.
That rollout is faster than GM had previously announced and comes as Chief Executive Dan Akerson pushes the company to ramp up production on Volt and roll out variants over the next several years to bring down its cost.
The Volt, which provides up to 50 miles of battery-powered driving before a gasoline-powered engine kicks in, is priced at $41,000 before accounting for tax credits.
GM has said it is losing money on the first-generation Volt, in part because of the cost of developing its 400-pound, lithium-ion battery pack.
Akerson and other GM executives have said they hope to bring down the cost of the Volt and push ahead in an area where they see a lead over Toyota Motor Corp.
The automaker said on Thursday it has 300,000 consumers registered as interested in buying a Volt.
(Reporting by David Lawder, writing by Bernie Woodall; Editing by Derek Caney, Dave Zimmerman)