More than 70 applications have been submitted to the Department of Energy seeking loans under its Advanced Auto Loan program, which aims to help companies build the next-generation of cleaner vehicles, a DOE spokesperson told us on Wednesday. The program was created under Section 136, of the Energy Independence and Security Act of 2007 and has authorized up to $25 billion in direct loans. The loans are the latest way for struggling green car companies to survive the difficult year ahead, but with so many companies vying for funds it’s unclear how DOE will wade through all the applications, make the smartest choices, and do so in a reasonable time frame.
The latest application for those funds came earlier this month from Integrity Automotive, who along with partner electric car company Zap, are looking for $200 million in loans from the program to build a manufacturing plant in Kentucky. Zap and Integrity said the loans are needed to begin production of the Zap electric cars in Kentucky later this year. As recently as August 2008, Kentucky Gov. Steve Beshear held a press conference to announce that Zap’s manufacturing project would bring 4,000 new jobs to the region, but one of Integrity’s key investors has reportedly since pulled out of the project.
Zap and Integrity join electric car maker Tesla, which has asked for $400 million and last year put off raising a $100 million round because of the unfavorable terms and economic climate. Ener1, which makes lithium-ion batteries for vehicles through its EnerDel unit, applied for $480 million in loans. And battery developer A123Systems, which plans to build a manufacturing plant in Michigan and still hasn’t gone public after declaring its intentions in August, applied for $1.84 billion in direct loans.
While green car companies are lined up to apply for the funds, we’re wondering how much of the process will be an analysis of the business case vs. political efforts? Particularly when it comes to startups that have little revenues and no profits, how will the DOE pick winners? The DOE only says that eligibility will be based on locating manufacturing facilities and doing engineering integration work in the U.S. In addition the DOE says it will take into account whether or not a company has reasonable costs associated with building or retooling a manufacturing facility.
Like the Bureau of Land Management, which is struggling to get through applications for building solar power plants on federal land, splitting up $25 billion among the most deserving companies is a monumental task for application reviewers. A DOE spokesperson told us simply on Wednesday that the loans were “under rigorous and thorough review,” and that the DOE is “moving with all deliberate speed in reviewing the applications, but any date by which we might make a decision would be pure speculation at this point.”
For companies that are unable to build plants without loans, those words won’t exactly be reassuring. But when it comes to helping out the cleantech cause, the loan program is proving as popular as the economic stimulus package.