V-Vehicle Update: Testing a Prototype, Still Hoping for Federal Funds

V-Vehicle, the auto startup backed by the venture capitalists at Kleiner Perkins and energy baron T. Boone Pickens, has begun testing prototypes of the vehicle it aims to build in Louisiana’s Ouachita Parish. V-Vehicle’s director of Louisiana assembly operations, David Hitchcock, tells the local Monroe News Star today, “A lot of testing and validation conducted so far has been in a virtual environment, but we’ve moved on to the physical testing phase.”

This testing is a sign that the startup is moving along, yet the firm is “still awaiting word,” on a DOE loan request, according to Hitchcock in News Star today. V-Vehicle has requested $320 million in funding from a Department of Energy program, and it needs to raise $350 million in equity or loans by March 1 (or else request an extension) in order to trigger most of a $82 million incentive package on offer from local governments.

The startup has plenty of company in the waiting game. More than 90 projects have reportedly requested funding under the DOE’s Advanced Technology Vehicles Manufacturing, or ATVM, loan program. And while low-interest loan awards poured out last June (including $8 billion for Tesla Motors, Nissan (s NSANY) and Ford (s F) ), they have slowed now to just two awards (to Fisker Automotive and Tenneco) in the nearly seven months since then.

This latest milestone for V-Vehicle — progressing to prototype testing of its first vehicle years after its 2006 founding — contrasts with the increasing momentum of Fisker, which is also backed by Kleiner Perkins. Although not founded until 2007, Fisker is now closer than V-Vehicle to production. After winning a $528.7 million loan this fall through the ATVM loan program, Fisker last week signed on A123Systems (s AONE) as a battery supplier and partner. It also closed a $115.3 million investment round to meet its equity requirements for the federal loan and help it set up U.S. manufacturing.

To qualify for funding under the ATVM program, new automobile manufacturers such as V-Vehicle need their model’s projected fuel economy (combined for city and highway driving) to be “at least as efficient as the industry average for that vehicle class” for the 2005 model year.

V-Vehicle remains tight-lipped about design details, and the company has not released images of the prototype or disclosed where it’s undergoing testing. Investors have, however, described V-Vehicle’s planned model as “environmentally friendly and fuel-efficient,” saying that it will run on gas and get more than 40 MPG.

That’s not a groundbreaking figure for fuel economy — Toyota’s (s tm) latest Prius model gets a combined 50 MPG rating (51 MPG city, 48 MPG highway). But V-Vehicle aims to provide this efficiency at a much lower price: about $10,000, less than half of the base price for the 2010 Prius and about a quarter of the price expected for Fisker’s planned second-gen model, the plug-in hybrid Project Nina sedan. Putting improved fuel economy within reach for a large portion of consumers could be a worthy goal, but if the feds have an option to support an affordable option that will yield more dramatic fuel and emission savings, it seems to me those would be tax dollars better spent.

Photo from V-Vehicle’s promotional video