2 Comments

Summary:

“Extremely surprised” and “shocked” are some of the words that secretive startup V-Vehicle and local officials in Louisiana have used this week in the wake of V-Vehicle’s failed bid for a federal loan to build a low-cost, high-MPG car. Is it really so shocking?

“Extremely surprised” and “shocked” are some of the words that secretive green car startup V-Vehicle and local officials in Louisiana have used this week in the wake of V-Vehicle’s failed bid for a federal loan to build a low-cost, high-MPG car. But given what few details we know about the company’s technology and stage of development, should rejection under the Department of Energy’s Advanced Technology Vehicles loan program really come as such a shock? Not if you look at what the loans in this highly competitive program have been designed to accomplish, and at the mix of companies and projects that have won the first five awards (see chart below).

In terms of the DOE loan, V-Vehicle brought to the table a shorter track record than even the earliest-stage awardee (Fisker Automotive). And V-Vehicle’s technology — a gas-powered, highly efficient car — represents a relatively small step away from fossil fuels, compared to the leap that could be possible with the electric vehicle tech that the DOE has supported in legacy player Nissan’s project.

Granted, V-Vehicle provided the DOE evaluation team with a heckuva lot more visibility into its technology and business plans than it has revealed publicly. It’s a respectable choice: Fewer promises made leaves fewer to break. But by any measure, V-Vehicle remains at a very early stage — which can make it difficult to prove financial viability for the term of the loan, one element factored into the ATVM loan decisions.

A short history isn’t necessary a deal breaker. As you’ll see in the chart below, the DOE has given the nod to other venture-backed startups: Tesla Motors and Fisker Automotive. Along with the risk of young ventures with unproven business models, however, Tesla and Fisker represent two of the most widely recognized plug-in vehicle brands. On top of that, Tesla already had a few hundred of its first all-electric model on the road when it applied for ATVM funds — not a lot, but more than any other automaker in the country.

Created under Section 136 of the Energy Independence and Security Act of 2007, the ATVM program holds authority to award up to $25 billion in direct loans. Projects can include re-equipping or expanding existing manufacturing facilities, establishing new plants in the U.S., or dealing with the engineering integration associated with these types of projects.

Under the program rules, ATVM-funded vehicle projects from new companies like V-Vehicle have to deliver fuel economy improvements of at least 25 percent compared to the average for that vehicle class in 2005 (for a manufacturer that already had cars on the market five years ago, its own 2005 fleet average serves as the base). According to the final rulemaking for the program, the DOE considers “the extent to which an advanced technology vehicle exceeds” the minimum 25 percent improvement when it’s “prioritizing projects.”

V-Vehicle has not shown a prototype or concept of any kind in its four years of existence. It has big-name backers, but it’s hardly the symbol for the nascent electric vehicle industry that Tesla and (to a lesser extent) Fisker represent. The company’s basic idea is to bring higher-MPG gas cars within reach for the masses. To do that, V-Vehicle revealed this week that it wants to build a four-seat car with better-than-average fuel efficiency at significantly lower cost than currently available models. Priced 35-40 percent, “below comparably equipped cars,” V-Vehicle CEO Frank Varasano said in a statement, the so-called V Car “would have a greater impact on the environment over the next five years than any electric or hybrid currently on the market or in development today.”

We’ll keep updating this chart as more decisions emerge from the ATVM office. For now, here’s your cheat sheet on winners and losers under the green car loan program.

Company Request (Award) Project (Scale) Jobs (Locations) Phase
Ford $11.4B ($5.9B) Engineer tech for fuel efficient gas cars, convert truck plants to build cars (deploy in nearly 2M cars/year) 35K (IL, KY, MI, MO, OH) EcoBoost engine tech entered production in 2009 model year. Company has $46B market cap
Nissan ($1.6B) Construct new plant and retool factory to build electric cars and battery packs (150K vehicles/year, 200K batteries/year by March 2015) 1,300 (Smyrna, TN) Nissan LEAF concept unveiled 2008, followed by multiple prototypes; production version unveiled Aug. 2009. Parent company has $38B market cap.
Tesla $350M ($465M) Set up two plants, one for electric Model S, one for battery packs and electric drivetrains (30K packs, 20K vehicles in 2013) 1,000 (Southern CA), 650 (SF Bay Area, CA) Model S concept debuted Mar. 2009. Company had delivered more than 500 Tesla Roadsters at time of ATVM award (Jun. 2009).
Fisker ($528.7M) Engineering and integration work with U.S. suppliers for luxury plug-in hybrid Karma; set up manufacturing for mid-range Nina model (75K-100K Nina vehicles/year by 2012) 5,000 (suppliers throughout U.S., Nina plant in Delaware, Karma production in Finland, engineering initially planned for Pontiac, MI but moved to Irvine, CA) Fisker Karma shown in prototype; Nina in very early development.
Tenneco ($24M) Design, engineer and produce fuel-efficient emission control components for gas, hybrid and diesel-powered vehicle engines (components slated to go into 2M vehicles in 2010-2014) 1,500 (total workforce at Tenneco’s MI, IN, NE facilities). Company considered a Tier 1 automotive supplier and has $1.44B market cap.
V-Vehicle $321.1M (Rejected) Retool old GM plant to build 4-person, gas-powered car with better than national average fuel economy (production goals not disclosed). 1,400 directly (Monroe, LA); 1,800 indirectly (northeastern LA) Company says “first production prototype” is now “in testing.”
  1. [...] Earth2Tech Green Car Loan Winners & Losers [...]

    Share
  2. (Please re-post this as a community service)
    Less than 20 car companies (The ATVM people say there were tons of applications but only a handful were car companies) applied for $25 BILLION DOLLARS in taxpayer money managed by a certain smug group of people at DOE in order to get loans to make green cars for Americans. This was not all of DOE that did bad things, just a private cadre of men led by Lachland Seward and Matt Rogers and his McKinsey “Partner” who flew back and forth to their homes in Silicon Valley every weekend on the taxpayer dime.

    There was enough money to help every single one of the car companies that applied. The administrators applied their interpretations of the law in order to benefit the large lobby group-related firms and avoided every one of the “politically unconnected “independent American companies. The companies staff that felt that Matt Rogers, Lachland Seward and the ATVM people lied to them include: Aptera Motors, Bannon, BioTrike, Brammo, Bright Auto, VVC, Eco Motors, Electric Motors, ElectroRides, Electrovaya, ETS, EV Innovations, Futuris, Limnia, Magna, Pheonix, Revolution, Smart Earth, Vextrix, Wrightspeed, XP, Zap and a group of others currently seeking a class action law firm.

    The amount of lobby and influence money spent by each awardee is in direct ratio to the amount of money awarded. Pay-to-play was the process.

    The smaller companies, due to lower overhead, could have dramatically more productive results with the money than the large burdened companies yet the money was given out based on political career advantages for the administrators rather than the technology advantages for Americans.

    The way the ATVM people set it up (Google “Siry says stifles innovation” for more), the smaller applicants were prevented from getting outside investor funding.

    All of the people that reviewed the applications had political and financial connections to GM, Ford, Chrysler and the large Detroit recipients.

    Each of those smaller American companies had technology and resources that presented a powerful economic threat, if they got the loans, to the large politically connected companies that did receive funds. The big car companies wanted the small companies cut-out at all costs.

    The Section 136 law was written to provide first-come-first serve funding but when the small companies got their applications in first, while the big ones arrogantly felt that they did not even need to apply because it was already pre-staged for them, the ATVM officials changed the rules in order to remove the first-come-first-serve standard of the law in order to cut out the smaller independents.

    Some of the companies that have gotten money have backed out of making the electric cars they said they would make. But they still get to keep the money.

    The Section 136 Law was created by the lobbyists for GM, Ford & Chrysler when they saw that they were about to go bankrupt and wanted to tap into additional taxpayer dollars by claiming the money was going to be used for electric cars in order to win rapid support for Section 136 by tugging at heartstrings. In retrospect, the money mostly went to gasoline car projects. Multiple public hearings have already shown the sister loan guarantee program to have been a failed program via intentional delays, the head was fired and replaced & massive complaints have been filed by many.

    Some of the companies that got the money have already wasted more money than other companies applied for as their total request.

    Some of the companies that got taxpayer loan money are not even American companies and/or are doing their manufacturing offshore with non-American employees. Thus, the ATVM process has cost American’s jobs.

    Those who got the money had to fill out little, or no, paperwork, went through little, or no, review and were connected to the DOE people who gave them the money and shepherded them through the process. Those who they wanted to keep out were forced to jump through more hoops, were slow-tracked in review and had made no political deals via hired law and lobby firms that the big companies has used to conduit “influence”.

    The decision about who would get money was made in 2008 by a private group who then pretended there was a lengthy review throughout 2009 but in fact, the money was pre-wired for a select few. The ATVM group lied to the other applicants about their application station when Lachlan Seward had already personally decided, without review, that his connections would get the money and ordered his staff to tell the applicants, for over a year, that they were all on the way to funding. This caused those applicants to expend money and brand reputation which they lost because of Sewards lies.

    All of the things that the rejected small companies (who did not pay lobby fees) were rejected for, were the same things that the insider big companies were doing. In at least two cases, big companies who were in violation of Section 136 rules were guided by reviewer-insiders to change their whole business structure in order to become suddenly “compliant “with section 136 while smaller companies received no such “help”.

    How does this affect you? It cost you and your friends jobs, it delayed American innovation, it made your family have to breath toxic petroleum fumes for another decade, it furthered a corrupt practice and it hurt domestic small business. This was all about money. Controlling who got to make money off of the technology and who got to delay electric cars so the old oil and steel guys could still make money off of their old assets.

    Share
  3. [...] CHEAT SHEET: Green Car Loan Winners & Losers [...]

    Share
  4. [...] CHEAT SHEET: Green Car Loan Winners & Losers [...]

    Share
  5. [...] CHEAT SHEET: Green Car Loan Winners & Losers [...]

    Share
  6. [...] CHEAT SHEET: Green <b>Car</b> Loan Winners & Losers [...]

    Share
  7. [...]    0 V-Vehicle Company, the auto startup with big name investors, ambitious plans to build low-cost gas sippers and recently dashed dreams, looks to be clawing its way back up. After losing a bid for federal [...]

    Share
  8. [...] state officials in Louisiana. V-Vehicle is looking to build the low-cost, gas-powered, car with higher-than-average fuel efficiency in northeastern Louisiana with funding from federal, state and local governments. V-Vehicle has [...]

    Share
  9. [...] Louisiana. Local officials in the region (where V-Vehicle aims to build low-cost gas cars with higher-than-average efficiency and a plastic shell) voted on Monday to renew support for V-Vehicle and provide $15 million for [...]

    Share

Comments have been disabled for this post