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 loans last month V-Vehicle let its lease on a Louisiana factory expire, but the local Monroe News Star reports this morning that V-Vehicle has negotiated to renew the lease on the facility for another nine months.
This comes at a time of reinvention for the 4-year-old startup as it readies to make another go at securing funding through the Department of Energy’s Advanced Technology Vehicles Manufacturing (ATVM) loan program. Earlier this month, V-Vehicle founder Frank Varasano — a former exec at Oracle and Booz Allen Hamilton — left his post as chief executive, and investor Ray Lane stepped in as temporary CEO.
After the DOE notified V-Vehicle last month that it would not win approval for its loan request — including $79.9 million for engineering integration and $241.2 million to set up manufacturing — V-Vehicle canceled its lease on the plant in northeastern Louisiana’s Ouachita Parish. The company said at the time, however, that it planned to negotiate a new agreement. After all, V-Vehicle had already begun work on the plant — a former Guide Corp. facility that made headlamps for General Motors — 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.
According to the Monroe News Star, the DOE rejected V-Vehicle’s original application because the agency wanted to see more private capital and a distribution network put in place. As we’ve explained before (see our cheat sheet on green car loan winners and losers), the likelihood that a company will remain financially viable for the term of the loan is one element factored into ATVM loan decisions.
The simple fact that V-Vehicle is a venture-backed startup with an unproven business model could make it difficult to prove financial viability. That said, loan winners Tesla Motors and Fisker Automotive have shown that a short track record does not amount to a deal breaker under the ATVM program, for better or worse.
But Fisker (which is backed by Kleiner Perkins, where Lane is managing partner) and Tesla had checked off a few more boxes on the DOE’s requirement list than V-Vehicle has at this point. Tesla had raised more than $200 million in private capital, delivered more than 500 cars and started setting up its own distribution network (including showrooms modeled after Apple stores) when it scored a $465 million loan commitment from the DOE in June 2009. Fisker had raised about $100 million, shown a prototype of its Fisker Karma model and started signing up dealerships to handle sales and service in the U.S. and Europe when the DOE awarded it a $528.7 million loan last fall.
For comparison, V-Vehicle has reportedly raised between $90 million and $100 million and said it’s testing its “first production prototype.” Lane told the News Star that, “we’re going to address the concerns they raised and any we might think they might raise in the future,” in a renewed bid for low-interest loans. Whatever other changes V-Vehicle undergoes in the coming months, it’s hanging on to the Ouachita Parish factory as part of that effort.