#doe

Reuters reports:

Republican leaders in the House of Representatives want to halve the balance of a U.S. government loan fund established to help the auto industry make more fuel efficient cars and trucks.

If plans to shift some $1.5 billion from the Energy Department advanced technology fund to disaster assistance are carried out, serious questions would be raised about Chrysler’s ability to fully capitalize on its bid for new financing.

That the DOE loan program is under attack comes as no surprise: it’s been savaged by both the GAO ( twice) and the Center for Public Integrity for a lack of clear goals, weak oversight, misappropriation, and political patronage (more on the patronage bit here). And with the Solyndra DOE loan scandal blossoming, it’s no surprise to see ATVM going under the axe (although Rep Steny Hoyer is leading the Democrat pushback). What’s worrying about this development, however, is that Fiat-Chrysler CEO Sergio Marchionne has said that the DOE loan was “a crucial part” of negotiations over its recent Wall Street bailout loan refinancing. When GM quit the program earlier this year, Marchionne also said that

I have neither the arrogance nor the cash to show any disdain toward the DOE process.

Chrysler also cites its ability to secure the DOE loans as a major risk factor in its latest 10-Q SEC filing. And with only about $10.2b in cash and equivalents on hand at the end of June, there’s a chance that this attack on the ATVM loan program could deal a body blow to Chrysler’s finances. Here’s hoping Sergio has kept the runt of the bailed-out automaker litter from dependence on this apparently corrupt, and politically vulnerable loan program.

With the environment taking an ever-larger place in automotive advertising, it’s interesting to note that Fisker’s latest brochure puts green in its place: behind sexy. Of course these sultry images [via BusinessInsider] aren’t free from environmental overtones, featuring taglines like “designed to get you hot, not the planet,” but it’s clear that Fisker is more heavily relying on the most traditional tool in the advertising playbook. Why? For one thing, even though Fisker is delivering Karmas, the EPA has not yet certified its efficiency rating… so we don’t even know how environmentally friendly it is yet. For another the Karma’s main rival, Tesla’s forthcoming Model S, is pure electric and therefore more appealing to wealthy environmentalists. Finally, unlike environmental messaging, sex doesn’t remind people that Fisker was the beneficiary of over half a billion dollars in government loans. Plus, sex is still, well, sexy. The more things change, the more they stay the same…

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.

Back in November of 2009, when GM announced that it would repay its government loans, it didn’t take much investigation to realize that The General was simply shuffling government money from one pocket to the other and that true “payback” was still a ways off. The New York Times asked me to write an op-ed on the subject, and I took the opportunity to point out the reality of the situation and note

G.M.’s global interests are far too diverse for it to serve its taxpayer owners faithfully, and it can’t afford to subjugate its business prerogatives to the political needs of its major shareholder in the White House. So, unless Americans develop a sudden obsession with G.M.’s $40,000 Volt electric car just in time for an I.P.O., taxpayers will be stuck with tens of billions of dollars in losses.

Afterward, while our government contemplates its runaway deficit and getting rid of its 8 percent of Chrysler’s equity, perhaps we’ll get an admission that General Motors still owes the American people. Without one, the relationship between the public and the automaker, and the Obama administration as well, may never be the same.

And now that our government finds itself “contemplating a runaway deficit and getting rid of its 8 percent of Chrysler’s equity,” would you believe that a similar federal money-shuffle is under way? Believe it.

Officials working with the Department of Energy tell the Detroit News that GM and Chrysler face no major obstacles in their quest for huge retooling loans from the DOE’s Advanced Technology Vehicle Manufacturing Loan program. GM is seeking $14.4b and Chrysler has asked for $8.55b in low-cost government loans. Says Matt Rogers, a senior adviser to the Energy Department

Project finance details need to be worked through, but those things are working out just fine as we work directly with the companies. It’s really a process of making sure that each of the projects that they have are in fact competitive.

Er, competitive compared to what?

With a mere $9b awarded so far, the Department of Energy’s Advanced Technology Vehicle Manufacturing Loan program is a long way from fulfilling its $25b promise to fund a turnaround in America’s green auto sector. So far, Ford has received $5.9b for a wide range of retooling projects (not a bailout, per Ford PR), Nissan has received $1.6b for Leaf production in Smyrna, TN, while startups Tesla and Fisker have received $465m and $529m respectively. According to the Detroit News, the rest of the 100-odd applicants for the $25b pool are stuck waiting, and with about $42b in total pending requests, not everyone is going to get a rose from the Feds. Predictably, the whining has begun.

It’s one thing to say “the electrification of the car is inevitable” (Bob Lutz) when you’re buying the motors from suppliers. But GM is putting (somebody’s) money where their oracle’s wandering mouth is, and getting into the electric motor building business. The General has announced that $246 million dollars, of which $105 million came from a DOE grant (not loan), will be spent on facilities to build lighter, smaller and more efficient electric motors for the next generation of their two-mode hybrid system and rear-wheel drive applications. Looks like a “slim-Jim” version is being developed for a “future range of rear-drive cars”. Hmm…

Former Tesla PR honcho Daryl Siry lays into the Department of Energy’s Advanced Technology Vehicle Manufacturing Loan program (ATVML) at Wired’s Autopia blog, taking the $25b program to task for “stifling innovation.” At its core, his argument is a simple one:

Startup companies that enjoy DOE support, most notably Tesla Motors and Fisker Automotive, have an extraordinary advantage over potential competitors since they have secured access to capital on very cheap terms. The magnitude of this advantage puts the DOE in the role of kingmaker with the power to vault a small startup with no product on the market -– as is the case with Fisker — into a potential global player on the back of government financial support.

As a result, the vibrant and competitive market for ideas chasing venture capital that has been the engine of innovation for decades in the United States is being subordinated to the judgments and political inclinations of a government bureaucracy that has never before wielded such market power.

All of which sounds very TTAC… in fact, our lengthy Bailout Watch series began with a similar analysis of the ATVML program (albeit with a Detroit-focused twist). Unfortunately, Siry’s intentions in this case are questionable… as are his conclusions.

The WSJ reports that EV manufacturer Aptera is asking the government for $75M from its energy-efficient retooling funds. Unfortunately for the makers of the Jetsons-inspired 2e, there’s some debate about whether its three-wheel design makes it a car or a motorcycle. Which means the gravy train could be delayed at the station. The Department of Energy has already rejected Aptera’s request for this reason, but Congress is wading into the issue at the EV maker’s request.