The most recent news out of the Elio Motors will provide grist for the rhetorical mills of both skeptics and enthusiasts of the startup car company. As we anticipated in our most recent post about Elio, the company has applied for a loan from the U.S. Department of Energy’s newly revived Advanced Technology Vehicles Manufacturing (ATVM) loan program. Though Congress had allocated $25 billion for the ATVM loans, less than half was disbursed before the program was put on hiatus in the wake of the failure of Fisker, which had been granted about half a billion dollars in loan guarantees. Elio Motors announced that it will be seeking a loand of $185 million to “accelerate the company’s plans to begin production” of their enclosed tandem reverse trike next year.
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.
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.
Ever since the messy collapse of solar panel maker Solyndra just two years after it received over half a billion dollars in government loans, the political climate around all green energy loan programs has heated up considerably. As the White House opened an investigation of the Department of Energy’s entire loan portfolio, loan recipients and startup automakers Tesla and Fisker found themselves under attack. And why not? Fledging firms with unproven products in brutal, scale-driven industries are hardly safe bets, even in the best of times. And with the government drowning in deficits, who’s in a gambling mood?
What gets left out in the hue and cry is that Tesla and Fisker between them represent “only” about a billion dollars worth of DOE loans in a program that was supposed to be able to loan out $25b (the final tally could be closer to $18b). Dwarfing the half-billion-each investments in Fisker, Tesla, and Solyndra are projects that seem a lot less risky in contrast to the startups. Here, in Smyrna, TN, I got to see one of them being built.
The Detroit News reports that the White House has ordered a review of the Department of Energy’s various loan programs in the wake of the Solyndra scandal, noting
White House Chief of Staff William Daley ordered an independent analysis on the state of the Department of Energy’s loan portfolio — including loans to solar, nuclear and auto companies.
“The president is committed to investing in clean energy because he understands that the jobs developing and manufacturing these technologies will either be created here or in other countries,” Daley said.
One of those programs is the so-called “Advanced Technology Vehicle Manufacturing” loan program, which was nearly used to fund the Detroit bailout and has since come under fire from various quarters. Twice already the Government Accountability Office has questioned the ATVM loan program for its lax oversight, weak goals, lack of technical support, inconsistency in awarding loans and the undetermined impact of funded vehicles. And those internal issues could help explain why the Center For Public Integrity has accused the ATVM program of operating a patronage scheme, alleging that major Obama donor and Tesla board member Steve Westly personally benefitted from loans made to the company. And on the Fisker side of things, backer John Doerr of the VC firm KleinerPerkins is another major Obama donor, suggesting a pattern of politically-motivated loan awards to well-connected EV firms that carry high risks. With government intervention in the auto industry still a hot-button issue in the wake of the bailout, this scandal has huge implications for the legitimacy of America’s emerging “industrial policy.”
Last week I wondered aloud about where the UAW stands on fuel economy, inspired by the union’s apparent flip-flopping between supporting the companies that employ its workers and backing its environmental allies on the left with talk of its commitment to green jobs. And after expressing concern about proposed CAFE increases, it seems the UAW is flopping back towards the environmentalist side of the equation, joining the so-called “Blue-Green Coalition” of labor leaders and environmental groups in expressing its vague support for “strong” emissions standards in a letter to President Obama [ PDF]. But with CAFE negotiations coming down to within 5 MPG or so of a final “number” for the 2052 standard, the letter’s lack of commitment means it’s still not clear where the UAW comes down in the policy debate. So instead of highlighting the union’s commitment to the environment, the letter ends up serving as a window into the UAW’s cynical, yet self-deluding side.
The Department of Energy’s Advanced Technology Vehicle Manufacturing (ATVM) loan program has come under fire from the Government Accountability Office before, and was the subject of a patronage investigation by the Center for Public Integrity and ABC News. And the bad news keeps piling up, with yet another nasty GAO report [ PDF] taking the program to task for running up higher-than-expected lending costs due to “industry risks” and for failing to provide required technical oversight.