By on August 28, 2013


Though it has been criticized by those who oppose government financing of business, in part because of the failure of Fisker, one of the recipients of the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing loan program, the DoE has announced that it will resume marketing the ATVM to industry and possible applicants. About 60% of the $25 billion that Congress allocated to the program still remains. No loans have been made since 2011.

“With no sunset date and more than $15 billion in remaining authority, the program plans to conduct an active outreach campaign to educate industry associations and potential applicants about the substantial remaining funds available and the application process in general,” a Dept. of Energy spokeswoman said.

Demand for the low interest loans may not be as high as it was when the program began disbursing funds in 2009, following the financial crisis which tightened credit and made it difficult for alternative energy firms, many of them startups, to find financing. Now that private capital is available at low interest rates, businesses may opt for private rather than public funding.

Some of the criticism of the ATVM program was due to the failure of other, unrelated, government loan programs, like the hundreds of millions of dollars loaned to Solyndra, but the ATVM program itself approved only five loans, the Ford, Nissan, Tesla, Fisker and mobility van maker Vehicle Production Group. Fisker and VPG were not successful, but Tesla has repaid their loan and Ford and Nissan are currently profitable and paying down their ATVM loans.

Analysts say that because of the political controversy involved, if any loans are extended, they will be to applicants looking for supplemental funding, not a main source of capital.

The DoE announcement was greeted with criticism by South Dakota Republican Sen. John Thune. “From Solyndra to Fisker, taxpayers have already paid too much for President Obama’s risky green energy bets. Now is not the time to revive defunct Department of Energy loan programs that have already wasted hundreds of millions of taxpayer dollars.”

Though the ATVM program began loaning money in 2009, the program was created in 2008 by the administration of George W. Bush with the support of congressional Republicans.

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16 Comments on “U.S. Dept. of Energy to Resume ATVM Alternative Vehicle Loan Program...”

  • avatar

    I tend to agree with Senator Thune, the Government should probably focus on making itself solvent before propping up the businesses of others.

  • avatar

    Just like any other government loan program. When TARP started to get paid back, those morons created the “Small Business Lending Fund” to help reward banks who do a lot of small business lending (loosely defined). Basically, the government will hand over money at a 1% dividend rate to banks that are doing what banks already are supposed to do. And that money is added to the bank’s capital base, which in turn allows them to lend even more and appear even more solvent than they would otherwise be without the magical gift of tax money that was originally lent out to troubled banks, then partially repaid, only to be redeployed so that some bureaucrats can say they’re helping encourage small business lending. In reality, it’s just an easy reward for many banks, not an incentive to change their business models.

    I’m rambling, but my thesis statement is that my head explodes when it comes to government funds.

  • avatar

    For the record, I don’t like Obama nor voted for the guy.

    With that said before the usual suspects start whining about the current administration, it was the Bush Adminstration that created this program in 2007, as part of the start of an energy independence program, and it was the Bush Adminstration that put the privso in the first pieces of federal bailout legislation that this program was to be used, e.g. – by passage basically said you MUST spend this money.

    Everyone is quick to point out A123 and Fisker, yet no one seems to mention Ford and Tesla.

    Just sayin’

    • 0 avatar

      The last paragraph of the article, and that follow-up, are admirable attempts at even-handedness, but the reality, I think, is a little more complicated.

      The ATVM Loan Program was established by the Energy Independence and Security Act of 2007, which was, passed by a Democratic Congress and signed by a Republican President. But that section of the law was, by my reading, basically a blank page — Congress delegated its authority to the DOE, which wrote the rule in 36 days. (Apparently this sort of thing usually takes more like 18 months.)

      So I don’t think it’s fair to call it Bush’s program or Obama’s program. I don’t even think it’s fair to call it the 110th Congress’ program — it’s owned, part and parcel, by the lifers at the DOE.

    • 0 avatar

      So what? Bad policy is bad no matter who started it. I can appreciate the nature of the preemptive “INB4” statement, but it should be a given that blind partisanship is just another mask for stupidity to wear.

  • avatar

    There were over 100 applicants for ATVM funding. Only five received any money, and it was major companies (Nissan and Ford) that received the bulk of what was lent out.

    At this point, I can’t imagine who would apply for the money. It seems that the hopefuls gave up when they realized that it wouldn’t be all that easy to secure the funding.

    It’s funny to hear Darrell Issa complain about the program, when he was trying to land ATVM money for Aptera Motors (which happened to be located in his distict.) Yes, I’m as surprised as anyone that a company that planned to produce a car that resembles a sperm could have possibly failed.

  • avatar

    Why do people assume that if you don’t like Obama and his policies, you must have liked Bush and his policies? There is another way. It’s called honoring the Constitution; if the major parties did that, we wouldn’t be arguing over things like this, health care, welfare, car window sticker MPG ratings, or any number of other things where the Federal government has no place.

  • avatar

    As of today, Tesla has a market cap of $20.2 billion. Granted, that’s theoretical money at this point, but assuming some of the paper millionaires sell their stock and pay capital gains taxes on the profit, the government will come out far ahead on the half a billion that it loaned (and was already paid back.) Tesla brought automobile manufacturing back to California at a time that it seemed like it was gone forever. Americans may disproportionately WANT Ford F-150s, but we NEED more efficient autos in the aggregate. I don’t know how we are going to get there without some sort of subsidy. As subsidies go, the DofE program isn’t too bad.

    I think at this point the Department of Energy should focus not so much on improving the efficiency of passenger cars, but rather improving the efficiency of trucks and busses, in particular, subsidizing the purchase of hybrid school buses by local school districts.

    • 0 avatar

      In gambling, sometimes you win and sometimes you lose. Tesla could have just as easily gone under. They still might has they’re consistently losing money.

      Even if Tesla could already be considered a net gain, other gambles weren’t. Many taxpayers just aren’t interested in gambling when there are more important things that should be taken care of.

  • avatar
    DC Bruce

    Patronage in an attractive wrapper. The answer to the question: Why lend out this money if it’s no longer needed (or never was)? is that it creates yet another micro-constituency for government largesse, which can later be cajoled into supporting this or that, by dangling the consequences of cutting off the subsidy.

    Don’t think that happens? Think again.

  • avatar

    In a world where the private sector is only leading us to globalization and MacJobs, government has to step up and take the initiative to pushing us in a direction where there is hope for a better tomorrow. Not everything tried is going to work, but giving it your best shot is better than nothing.

    • 0 avatar

      Save a missing “let me be clear”, this could have been pulled from an old Obama stump speech. (Also, it’s “McJob”. A “MacJob” is actually pretty nice, if you can stand all the secrecy. Apple has great benefits.)

      That aside, though, there’s one thing I hope you’ll consider — where did that money come from? Taxes. Handing out $25B in loans means extracting $25B from the private sector. (Well, in reality, we borrowed it, which is even worse. But let’s ignore that for now.) Why, exactly, is the government able to invest that $25B (plus whatever commission they tack on for cutting the checks) better than the private sector? I hope you have some reasoning here beyond “private sector bad, public sector good”.

      So, yeah, usually the best thing government can do *is* to do nothing, and let the market sort itself out?

      • 0 avatar

        Because while a competitive market is great at efficiency, it sucks at planning. It is completely reactive. The market doesn’t see that some “actors” are really bad guys we shouldn’t associate with. It doesn’t see that moving manufacturing to China is strategically stupid. It only handles supply and demand and only cares about the bottom line.

        Getting off of oil has taken and will take massive R&D and time. Market forces would have us wait until oil prices go through the roof before searching for alternatives. For those familiar with economic principles, demand for oil is not very elastic as we’ve seen since 2011. Because of this, when demand tops supply (thanks China), oil prices will rise sharply, not gradually and we’ll be left with no alternative, but to do without. And if you think we just need to drill more at home, do some math for yourself. The “massive” Bakken formation we’re tapping now would last us about 1 year as a sole source. And the easy stuff is tapped. The oil we’re going after now is much more expensive and energy intensive to drill.

        The more intelligent people in this country can see this coming and they know the R&D needs to happen now and can’t wait on market forces. The grasshopper story is a good analogy. The grasshopper played all summer and when winter came, he had no food nor any place to keep warm.

  • avatar
    doctor olds

    When considering the merits of this, apparently, bipartisan program, bear in mind: It is a quid pro quo in exchange for very aggressive vehicle emissions and fuel economy targets demanded by regulation,CAFE.

  • avatar
    el scotto

    Let the seining of dollars from the graft river begin!

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