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Summary:

General Motors and Chrysler, in their bids for government loans for green car manufacturing, have cleared the hurdle of demonstrating financial viability. Now it’s a matter of showing that their ideas for producing more efficient vehicles are on the cutting edge.

General Motors and Chrysler, in their bids for low-interest government loans for green car manufacturing, have cleared the hurdle of demonstrating financial viability. In a call with reporters Thursday afternoon, the DOE chief’s senior adviser, Matt Rogers, said the agency is now “meeting actively” and “working quite aggressively” with the automakers on their applications for direct loans under the Advanced Technology Vehicles Manufacturing program to help retool plants in order to produce more efficient vehicles.

Before the two automakers completed restructuring, financial viability was a looming question that kept them out of the running for Department of Energy loans. Now it seems to be a matter of showing that their ideas for producing greener, more efficient vehicles are on the cutting edge and will be worth the bet under a program that has already placed a tall stack of chips on electric vehicle projects from Fisker Automotive, Nissan and Tesla Motors, and on an MPG-boosting project from Ford. According to Rogers, the main focus at this stage of the evaluation process for GM and Chrysler  is “making sure each of the projects they have are competitive.”

GM is waiting for word on requests for a total of $14.4 billion to retool factories, while Chrysler has applied for $8.55 billion. That compares to an $11.4 billion request from Ford, which ended up getting a $5.9 billion award to engineer tech for fuel-efficient gas cars and to convert existing plants to build cars instead of trucks. (See our cheat sheet on Green Car Loan Winners & Losers.)

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 established manufacturers like GM and Chrysler would have to deliver fuel economy improvements of at least 25 percent compared to the automaker’s own fleet average in 2005. 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.”

So what does the competition look like? A hungry, anxious crowd that may not have the wherewithal to wait out the lengthy process of securing funds under this program.

More than 100 companies have requested loans under ATVM, including many startups facing a potential cash crunch for their manufacturing plans. At the same time, the Detroit News reports that several of the legacy players that had thrown their hats into the ring for ATVM funds have given up, including Continental, Lear, Federal Mogul, Metaldyne and BorgWarner.

But there are still more open palms than there are dollars to fill them. Of the $25 billion pot, about $16 billion remains. And while Rogers said that decisions on GM and Chrysler’s applications are expected “shortly,” awards have stalled in recent months. Following the award of some $8 billion to Tesla Motors, Nissan and Ford in June 2009, only two conditional loan commitments totaling $552 million have been made in the 11 months since.

For more research on green cars check out GigaOM Pro (subscription required):

Report: IT Opportunities in Electric Vehicle Management

How EV Battery Startups Can Cross the Valley of Death

In Q3, Uncle Sam Was the Green IT Kingmaker

This article also appeared on BusinessWeek.com

  1. gwenmcgreen Friday, May 14, 2010

    It is really amazing to see the hungry competition between powerful companies involved in such an massive industry. And it is also amazing to get to see all the capital involved and the way in which business loans influence the competition.
    Great article.

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  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.

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  3. It will help a lot in order to fight against globalwarming.

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  4. the Honda hybrid is a step to make the world clean and green.by watching Honda other companies also research in this field so finally we will get many green cars.
    Smart Car Care

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