| Click here to view the embedded video. Critics of the current administration have pointed to the impending bankruptcy of Fisker Automotive and the recent suspension of operations at taxi maker Vehicle Production Group as examples of why the government shouldn't be picking winners and losers in it's zeal to promote alternative energy. The DoE effort under which those two companies received financing is the Advanced Technology Vehicle Manufacturing Program, ATVM. Putting aside political ideologies, contrary to the image given by the apparent failure of Fisker and VPG, the ATVM program actually has a pretty decent track record when it comes to picking winners and losers.
 Revolution Motors The ATVM was actually started during the Bush administration, in 2007 and received $25 billion funding from Congress in 2008, before President Obama took office, though the final determination of all loans awarded so far has been made by the Obama administration. Only a few loans have been made so far, so it's easy track the program. In part the small number of loans is because of the political fallout over the 2011 failure of Solyndra, which got over a half billion dollars from the DoE as part of a different program at the DoE. So far less than $9 billion of that $25 billion has been awarded and none since March of 2011, though in the video above, posted in March of 2012, the Department of Energy explicitly was soliciting more companies to apply for loans.  Vehicle Production Group Of the car companies that were actually awarded loans, the DoE did pretty well, three out of five seem to be thriving. Ford was the primary recipient of ATVM loans, $5.9 billion, used to upgrade factories in six states. Nissan came next, with $1.45 billion, used for a battery factory and preparing their Smyrna, Tennessee plant for Leaf production. Tesla, currently flying high with investors and now producing Model S EVs at a rate of 20K/year, got $465 million and has repaid it in full.  Coda The status of Ford and Nissan's debt to the ATVM is unclear, though I presume they are not behind in their payments. Ford has been very aggressive in retiring corporate debt since its turnaround following the mortgaging of the company for something like $23.6 billion in 2006. Of the two failures, Fisker got promised just over a half billion, of which about $200 million was drawn before the DoE put the brakes on after Fisker failed to meet loan criteria, and VPG got the smallest loan, $50 million.  Bright Automotive Not only is the ATVM currently batting .600 on moneys disbursed, looking at the companies that have been turned down for loans, the Department of Energy has actually done a even better job picking winners and losers in determining which startup car companies had truly viable business plans.  Aptera While it's true that two out of the three startups funded under the program are failures, assuming that Tesla is indeed a success, those three were the only automotive startups out of 18 that applied were approved for loans. We know about seven of those rejected because they went public with the denial. All seven are pretty much out of business today. Of them, only Coda actually produced real production cars for sale to the public and in their case they only sold about 100 cars. Perhaps if your business model is significantly dependent on government financing, maybe you need a different business model. Tesla has had ample private financing and looks to be viable, but Fisker had over a billion dollars put up by private investors, about six times the amount loaned by taxpayers, and even that wasn't sufficient.  XP Vehicles In addition to Fisker, VPG and Tesla, whose loans were approved, companies that applied for loans and went public with their refusal, were:
 Next Autoworks Actually, a lot more than 7 other companies applied for loans. A Freedom of Information Act request filed in 2009 revealed a list of 108 applicants. So in all, there were only five companies approved for ATVM loans and 103 that were rejected or put on hold. Looking over the FOIA response, I identified another eight automobile startup companies, Zap, Revolution Motors, Electrorides, Wrightspeed, Phoenix Motors, Electric Motors Corp, Environmental Transport Solutions, and Local Motors.  Carbon Motors Zap has been perpetually troubled, Revolution hasn't gotten beyond a prototype for their leanable reverse trike, and Electric Motors is out of business. Four of the companies that seem to be surviving, Electrorides, Wrightspeed, Phoenix and Environmental Transport, are concentrating on electrified commercial vehicles, not passenger cars. It look like investing money, private or public, in startup passenger car companies, is not a very good bet.  Think Rather than being a profligate waste of taxpayers' money, the Advanced Technology Vehicle Manufacturing Program appears to have been managed in a responsible manner. The majority of the companies that received funding are in business and appear to be thriving. The majority of startup car companies, which are high risk enterprises in the first place, that were turned down for loans or that had their applications put on hold in 2011, are either no longer in business or financially troubled. Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don't worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS from The Truth About Cars http://www.thetruthaboutcars.com | ||||||||||||||||||||||||
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