The House approved the $25 billion in low-interest federal loans today intended for the re-tooling of the big three.

House of representatives voted 370 to 58 to approve the spending bill that includes $7.5 billion to start the loan program.

The Senate will agree to the bill this week and by the end of the week President Bush will sign it into a new law.

The new loan program is the basis for the financial backing of the auto industry, by allowing domestic manufacturers to tap into low interest loans to finance re-tooling costs.

Some lawmakers argue that this funding package is not a bailout at all. Since the loan amount still is put out with a hefty interest rate, the federal government will turn a profit no matter what.

Lobbyists have called for more lax terms in order to loosen the conditions on what the money should be spent on, however the House of Representatives have not complied to those demands.

The majority of the funds still must be used to retool production lines to manufacture vehicles, which have a 25% or higher gas mileage efficiency improvement over the model it replaces.

In a statement given by Compact Power’s CEO Prabhakar Patil, the company reassures the general public that it’s lithium-ion batteries are ready for GM’s 40 mile range test, in which the vehicle must run on all electric power.

Compact Power is the Detroit based unit of LG Chem, the South Korean giant, which is in the running to win the bidding for the battery supply contract of the upcoming Chevy Volt.

Patil confirmed GM is going to make a decision on a single battery supplier by the years end. The shares of that company will most likely skyrocket, as GM has already announced it will be losing money on the first generation Volt, therefore financial constraints will play a minor role compared to reliability in the selection process.

GM is on track to release the new Chevy Volt in November 2010.

Patil expects lithium-ion technology batteries to dominate the market for the next 15 to 20 years in the automotive sector.

Compact Power is in talks with other vehicle manufacturers as well to land lucrative contracts in the battery business. Projections for the company look stellar provided they are able to meet stringent supplier requirements and their product performs. Patil pegs the sales projection at $1 billion over the next 10 years, as the hybrid vehicle industry picks up steam.

Amidst a massive selloff on the Dow Jones this afternoon, a couple of things have been overlooked. GM in the first day into it’s second century of operation, closed below $10 per share at $9.98 down almost 8% from yesterday.

GM CEO Wagoner, blames lack of consumer confidence, the big Wall Street selloff and several other factors for the price slide.

Without a doubt, the auto sector is in turmoil, when all parties involved, Tier 1 suppliers, manufacturers and dealer groups posted sharp declines today.

Lear Corp. posted an 8% decline, along with AutoNation, which also posted an 8% decline. Bill Gates who became a stockholder of Auto Nation earlier this year must be quite displeased. Or maybe, he is just gearing up to sell Microsoft operating systems for cars through Auto Nation as he quietly manuevers himself into a larger shareholder position.