General Motors Corp said on Tuesday it would use an existing Michigan plant to build engines for its key all-electric Chevy Volt and its new Cruze small car, slashing capital investment costs by $120 million.

GM, which last week raised its request for U.S. government aid to support a turnaround, said it would invest about $250 million at an existing plant in Flint, Michigan, rather than continue construction of a new facility there at $370 million.

“This means that GM will not invest in new floor space at this time due to current capital expenditure constraints and available floor space in existing facilities,” GM said in a statement.

GM has received $13.4 billion of loans from the U.S. Treasury and has sought up to $30 billion overall.

The automaker expects to begin preparing its Flint South engine plant in the spring for installation of new machinery and equipment. Production of the four-cylinder engines is targeted to begin in December 2010.

Source: Reuters