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DOE Rejects V-Vehicle's $320 Million Loan Application, Project May Be Scrapped

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Teaser for Louisiana's new VVC plant

Teaser for Louisiana's new VVC plant

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2011 VVC sketches

2011 VVC sketches

Enlarge Photo

2011 VVC sketches

2011 VVC sketches

Enlarge 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.

Our take

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.

[NOLA.com]

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Comments (3)
  1. (Please re-post this as a community service)
    Less than 20 car companies (The ATVM people say there were tons of applications but only a handful were car companies) applied for $25 BILLION DOLLARS in taxpayer money managed by a certain smug group of people at DOE in order to get loans to make green cars for Americans. This was not all of DOE that did bad things, just a private cadre of men led by Lachland Seward and Matt Rogers and his McKinsey “Partner” who flew back and forth to their homes in Silicon Valley every weekend on the taxpayer dime.
     
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  2. There was enough money to help every single one of the car companies that applied. The administrators applied their interpretations of the law in order to benefit the large lobby group-related firms and avoided every one of the “politically unconnected “independent American companies. The companies staff that felt that Matt Rogers, Lachland Seward and the ATVM people lied to them include: Aptera Motors, Bannon, BioTrike, Brammo, Bright Auto, VVC, Eco Motors, Electric Motors, ElectroRides, Electrovaya, ETS, EV Innovations, Futuris, Limnia, Magna, Pheonix, Revolution, Smart Earth, Vextrix, Wrightspeed, XP, Zap and a group of others currently seeking a class action law firm.
     
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  3. @Carlo: as much fun as conspiracy theories are to promulgate, they usually end up making the theorist sound crazy and/or bitter. Rather than accuse you of being either, I'll just say this: I've had waaaaay too much experience dealing with grants and granting agencies on local, state, and federal levels. And as annoying and bureaucratic and Kafka-esque as they can all seem, there's one thing that most agencies do right: they award grants based on the merit of applications, not on the fact that they have a pot of money that needs to be disbursed.
    .
    V-Vehicle's case is exemplary: the DOE rejected the company's application because they said that they didn't think V-Vehicle is viable. Rather than hand over $320 million to a doomed enterprise, they've held onto it. Eventually, that money will go toward a company with a stronger application, or it'll go back into a general fund. Doesn't that sound more responsible?
    .
    And you can't really argue that "independent" companies didn't get any of the DOE money. I mean, Tesla and Fisker are both start-ups, and both fit the indie bill.
     
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