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Who is next for $17B in DOE auto loans?
June 24, 2009 - by Lisa Sibley, Cleantech Group
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The U.S. Department of Energy (DOE) is giving Ford, Nissan and Tesla Motors the boost for which they’ve been waiting, but Chrysler, General Motors and Think Global could be some of the next in line.
The DOE announced $8 billion in its first conditional loan commitments yesterday to develop advanced vehicle technologies, with the first winners being $5.9 billion for Ford Motor (NYSE:F), $1.6 billion to Nissan North America (NASDAQ:NSANY) and $465 million to Tesla Motors. Terms of the loan guarantees were not disclosed.
The only surprise was Nissan, said Bruce Harrison, associate director of IHS Global Insight’s Automotive Group, which provides industry analysis, forecasts and data for the auto industry. Harrison told the Cleantech Group that, World Trade Organization issues aside, he was surprised to see U.S. taxpayer dollars go to a foreign company.
General Motors and Chrysler are most likely disappointed they didn’t receive loan guarantees, but Harrison said he suspects the automakers will be awarded the funds later on when they emerge from bankruptcy.
“The legislation originally passed requires the manufacturers be solvent,” Harrison said.
The DOE wouldn’t release the list of companies that didn’t receive funding this time around, as they could still be in the running. There were more than 100 applicants.
As part of the Advanced Technology Vehicles Manufacturing program, the DOE plans to provide additional loan guarantees from the remainder of the $25 billion during the next several months to large and small auto manufacturers, parts suppliers, and others focused on achieving a more fuel efficient economy. Ford, Nissan and Tesla also have to raise funds before securing the loans elsewhere.
Ford said it plans to convert factories in Illinois, Kentucky, Michigan, Missouri, and Ohio to produce more than a dozen more fuel-efficient models. It also plans to finance engineering advances to traditional internal combustion engines and electric vehicles. Popular models planned for fuel efficiency upgrades include the Focus, Escape, Taurus and F-150.
Nissan plans to put the funds to work building advanced EVs and battery packs at its manufacturing facility in Smyrna, Tenn. The automaker also expects to build a new advanced battery manufacturing facility and modify an existing assembly facility. Nissan estimates the project could result in an increase of up to 1,300 jobs in Smyrna.
“It seems the focus would be on a U.S. corporation,” Harrison said. “The logic behind the plant being built in Tennessee is clear, but the ownership is still offshore.”
In April, Nissan was one of three automakers to receive loans from the European Investment Bank for research and development of “greener” and more fuel-efficient vehicles. Nissan was offered €400 million ($561.23 million) to be split between its plants in Sunderland, UK, and Avila, Spain. (see Investors pump up Wind 2.0).
Jaguar and Land Rover also secured funds.
For Tesla, the first part of the funds is planned to finance a manufacturing facility for its Model S sedan. Production of the $57,400 Model S is expected to start in 2011 and ramp up to 20,000 vehicles per year by the end of 2013. The facility is expected to create 1,000 jobs in Southern California.
The second part of the funds is planned to be used to build a facility to manufacture battery packs and electric drive trains in Tesla vehicles and those of other automakers, including the Smart For Two city car by Daimler, which owns a stake in Tesla (see Daimler takes 10-percent stake in Tesla Motors). Tesla's battery pack production is planned to begin in 2011, reaching about 10,000 by 2012 and 30,000 packs in 2013, according to a news release. The new facility expects to employ 650 people in the Northern California Bay Area.
In February, Tesla's CEO Elon Musk said the DOE told him it could disperse funds within four or five months (see Tesla Motors on an upswing?).
Tesla applied for $350 million in loan guarantees from the DOE to build the factory on brownfields and further develop its batteries (see Tesla CEO says carmaker is bouncing back). Tesla scrapped plans to build the factory on undeveloped land in San Jose, Calif., because it would not qualify for the DOE funds (see Tesla to build factory, new HQ in San Jose).
Norwegian EV producer Think Global spokeswoman Katinka von der Lippe said the company was encouraged by the news of Ford, Nissan and Tesla getting the loan commitments.
“We think this is going to push forward electric vehicle transport,” she said, adding that Think's North American business unit is still in the running for the remaining funds.
She wouldn’t disclose how much the company is seeking, but the company has said it wants to build a manufacturing facility in North America through subsidiary Think North America (see Think says U.S. electric car market is overtaking Europe). In March, Think said that leading cleantech investor Kleiner Perkins Caufield & Byers took an ownership stake in Think North America (see Think gets EU-wide approval for EV sales).
These aren’t the first DOE loan guarantees for cleantech companies. In March, the DOE offered a $535 million loan guarantee to Fremont, Calif.-based solar cylinder developer Solyndra to expand its manufacturing (see Solyndra nabs $535M DOE loan for 500 MW factory). Solyndra needs to raise $200 million to access to funds. The company has reportedly closed a round of more than $100 million.
Loan guarantees aren’t the only funds for autos that the DOE is granting. Earlier this month, the DOE announced $240 million was set aside to fund the development of high-efficiency commercial and passenger vehicles (see DOE sets aside $300M for autos, solar, carbon capture).
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The scoop
Submitted on June 26th, 2009 by Sarah Porter (not verified)Regarding the politics of the DOE ATVM Loan awards:
So it turns out to be all the best loans money can buy.
Ford paid over $14M to elected officials and consultants in order to get the loan. Ford paid the third largest amount and Ford got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. 21 elected officials had direct benefit from the deal.
Nissan paid over $10M to elected officials and consultants in order to get the loan. Nissan paid the third largest amount and Nissan got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. The law and public statements by elected officials state that the money was to increase American competitiveness for America car companies yet the money was given to a Japanese company who will send all of the profits back to Japan. 7 elected officials had direct benefit from the deal.
Tesla paid over $100,000.00 to elected officials and consultants in order to get the loan. Tesla paid the third largest amount and Tesla got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. Tesla’s filings show that their business model is unsustainable compared to competitors, that they were 200% off on the BOM of their car, that all of their first funding was wasted so they have to pay back twice as much to investors as competing companies and that their technology is so old, it all needs to be redone yet they still got money. 18 elected officials had direct benefit from the deal. Tesla did not even read the rules for the loan and planned to build a building when the NEPA rules make that option impossible so they had to restart the process, which is supposed to put one into a new cycle yet they were kept in the previous cycle and put ahead of Fisker, Bright and others who had applied earlier than Tesla. Tesla provided massively creative accounting records to show that they were financially sustainable and have issued numerous press releases to try to make people think that but, in fact, the truth is that they are not because of bad management issues that they cannot get past.
The ATVM program was created by Ford, GM & Chrysler lobbyists to pad their company’s pockets and those three had pre-hardwired the entire $25B for their own pockets but something happened in the process when Senator Bingaman added a few key lines that opened the door for OTHERS to apply to build green technology and required that those who get the money were “financially sustainable” businesses. Back when the ATVM was authored to save Detroit, it was fully known that Detroit was going to go bankrupt. Ford had the same problems as GM and Chrysler but they went around the world getting bailout money instead of going first to US funds. As law required public exposure of the bankruptcy, Bingaman’s brilliant plan to finally create a green transportation industry was revealed. The very people that had stopped green cars for over 100 years suddenly became the first people to, accidently, cause them to happen but now others could do it too.
Bingaman should get the Congressional Medal of Honor for pulling off this impossible trick and finally giving America the Electric Cars it should have had for the last hundred years.
Once Detroit realized this, they tried to hijack the whole ATVM program with a takeback at the end of 2008 but that effort was defeated by a close late night vote. Now that it was out there, Detroit lobbyists and influencers fought to get the review of applicants delayed for as long as possible because they realized that, in a recession, most of the smaller competing interests could be forced to go out of business if they could just be kept away from the money for long enough. Major American TARP banks have said that the standard commercial loan process that each of these 26 applicants (not hundreds of applicants- There were 26 applicants in the round) should take 4 weeks at the longest and 3 weeks nominally. It seems clear that the loans were delayed due to political agendas and not process issues.
Bright Automotive had applied on time, ahead of the others, turned in low overhead numbers and a great path too profit but they were virtually ignored while intensive meetings were conducted with Nissan, Ford and Tesla because those parties paid for it. The law says that this, and the purchasing of favors, gave those parties an unfair business advantage using taxpayer dollars, over Bright. A case Bright would easily win if they choose to run with it.
Clearly, it isn’t over yet. Stay tuned for the Senate, Congressional, Ethics Committee and media reviews of this one. Watch for the charts connecting who-to-who. (It is OK to re-post this)
great read!
Submitted on July 1st, 2009 by Unregistered user (not verified)great read!
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