Obama administration may re-up $25 billion green car loan program

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Michael Bastasch DCNF Managing Editor
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The Obama administration may revive the $25 billion auto loan program that spawned faltering companies like Fisker Automotive and the Vehicle Production Group, reports Detroit News.

“We are looking at what a new (loan) solicitation might look like. That’s an ongoing discussion,” Energy Secretary Ernest Moniz told Detroit News. “We are actively looking at what might be an effective new (request for proposals).”

However, Moniz said that the Energy Department was not currently considering any applications for new retooling loans.

“There’s no active consideration,” Moniz said.

The Advanced Technology Manufacturing Program was meant to spur the creation of more fuel efficient vehicles and alternative vehicles, but the program has not issued a new loan since March 2011, after two loan recipients began to falter and halt production.

The most high-profile case was Fisker Automotive, which was on the edge of bankruptcy earlier this year after getting $192 million in loan guarantees from the Obama administration. However, the Energy Department cut Fisker off in 2011 after the company failed to meet required benchmarks to get taxpayer dollars.

Fisker produced the $103,000 Karma, a luxury hybrid which, according to reports, Fisker lost $557,000 on each of the 2,000 Karmas it has sold worldwide.

Earlier this year, the Vehicle Production Group stopped production and laid off about half of its workforce. The company got $50 million in 2011 from the Energy Department to produce build the MV-1– a six-passenger, wheelchair-accessible van that would run on compressed natural gas.

The company was estimated to make 22,000 gasoline and natural gas-powered vehicles per year and create 900 permanent jobs, but the company stopped production after the DOE cut off its funding and only built 2,500 MV-1 vans.

But supporters of the program point to the start-up company Tesla Motors, which paid off its $465 million government loan nine years early.

“The Department first offered loans to Tesla and other auto manufacturers in June 2009, when car companies couldn’t get other financing and many people questioned whether the industry would survive,” Moniz said back in May. “Today, Tesla employs more than 3,000 American workers and is living proof of the power of American innovation. This is another important contribution to what the Obama Administration has done to preserve and promote America’s auto industry.”

However, government documents obtained by Jalopnik showed that 10 out 18 green car companies that asked the federal government for support have since filed for bankruptcy or stopped production.

Jalopnik reports that many of the car companies that failed blamed their failure on the fact that they did not receive any taxpayer dollars.

“Each of these applicants has been caught for several years in a costly and extensive DOE due-diligence process,” said William Santana Li, CEO of Carbon Motors — one of the companies that did not get government funding. “Carbon Motors simply appears to be the last victim of this political gamesmanship.”

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