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V-Vehicle Co., the 4-year-old auto startup that aims to build relatively low-cost, high efficiency vehicles with help from Uncle Sam, has undergone a shakeup in the days since the Department of Energy rejected the company’s request for $321.1 million in direct loans. V-Vehicle founder Frank Varasano (pictured) has left his post as chief executive, and investor Ray Lane has temporarily stepped into the CEO role, according to reports from the local Monroe News Star of Louisiana, where V-Vehicle started work on a plant last summer.
After a yearlong bid for DOE funding, the rejection — based partly on concerns about the company’s financial viability — caught V-Vehicle by surprise. Varasano, a former exec at Oracle and Booz Allen Hamilton, said in a statement last month that discussions with the DOE had left the company feeling “confident and optimistic that the loan applications would be approved.” But based on what the loans in this highly competitive program have been designed to accomplish, and the mix of companies and projects that have won the first five awards, the company may have been overly confident.
It’s unclear at this point whether Varasano stepped down or was pushed out of the company, but we have reached out to V-Vehicle for confirmation and details.
Lane, a managing partner with venture capital firm Kleiner Perkins Caufield & Byers, has backed other auto-related startups — notably Fisker Automotive, which last fall won a conditional commitment for $529 million in loans under the same DOE program that V-Vehicle has been eying. According to the report out of Monroe this weekend, Lane will run V-Vehicle only until the company finds a full-time, permanent CEO.
In the meantime, V-Vehicle has canceled its lease on the plant in Ouachita Parish where it began work in July with funding the state of Louisiana. As required under its agreement for a $133 million incentive package that called for V-Vehicle to raise some $350 million in equity or loans to pay for its share of the project, V-Vehicle has now reimbursed the state more than $6 million.
But while the startup is down, it’s not out. V-Vehicle plans to negotiate a new agreement for the facility, and also make another go at securing funding from the DOE’s Advanced Technology Vehicles Manufacturing loan program.