2011 VVC sketchesEnlarge Photo
2011 VVC sketchesEnlarge Photo
Bad news for V-Vehicle Company: the U.S. Department of Energy has denied the start-up's request for $320 million in low-interest loans for the development of high-efficiency automobiles at a facility in northern Louisiana. As a result, the company will almost certainly forfeit $87 million in support from the state of Louisiana, leaving it with less than $90 million in the bank. Scrapping the project seems like a distinct possibility.
Last time we checked in on V-Vehicle, the company had missed a key financing deadline. As per a deal brokered with the state of Louisiana, V-Vehicle needed to raise a minimum of $350 million in capital by March 1, 2010; otherwise, the company would lose its shot at the state's $87 million package of cash and incentives. A key element in V-Vehicle's fundraising plan was its application for $320 million from the DOE's $25 billion Advanced Technology Vehicle Manufacturing Loan Program -- a program that had already awarded low-interest loans to Ford, Nissan, Tesla, and Fisker.
Unfortunately for V-Vehicle, March 1 came and went with no word from the DOE. The Louisiana legislature had expressed willingness to extend V-Vehicle's deadline by a few more months, but now that the DOE has refused the company's loan application altogether, the issue appears to be moot. V-Vehicle has been pitching to investors for over a year, and the company has only secured around $90 million, so the possibility of V-Vehicle raising over $250 million in just a couple of months seems far-fetched, at least. (Not helping the situation: Louisiana's current budget deficit of about $400 million.)
V-Vehicle, for its part, seems shocked by the DOE's rejection letter. For months, V-Vehicle and its spokesman Joe Fisher have expressed nothing but unfettered optimism about the company's loan application: "Our year-long discussions with the Department of Energy had left us confident and optimistic that the loan applications would be approved."
To many others, however, the DOE's decision was a foregone conclusion. In a letter to V-Vehicle, the DOE explained that its rationale for rejecting the application stemmed from fears about the company's financial viability. As the kids say: duh.
On the upside, it appears the DOE seemed to indicate a willingness to consider another application from V-Vehicle in the future. Before submitting that one, however, the DOE suggested that more proof of private investment would help the company's chances. As it stands, the company will have to return $6.8 million it had already taken from Louisiana as an advance on the state's $87 million incentive package. That should leave the company with around $80 million in the kitty.
It's hard to draw many opinions about start-ups. Generally speaking, they keep the details of their business plans private, leaving only the barest breadcrumb trail of bulletpoints and sketches to tantalize the public. All we really know about V-Vehicle is that it planned to produce vehicles with high-efficiency combustion engines. (John Voelcker has a little more info about those engines, if you're interested.) Beyond that? Zilch.
As a result, we can't say whether V-Vehicle was/will ever be viable, though it sounds a little scheme-y to some of us. What we can say, however, is that if the company hopes to move forward, it's going to have to get its feet on the ground, hit up some new investors, and maybe start the long, slow process of applying to the DOE all over again.