GM, Chrysler's Green Car Loan Bids Inch Forward, Face Upstart Competition

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

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