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Is America Blowing Its Chance To Lead In Electric Vehicles?

Bright Automotive, a promising start-up company developing hybrid plug-in delivery vans for fleet customers, closed its doors this week after running out of money. It’s too bad, really. Its lightweight van, called the Bright Idea, seemed like a perfect vehicle for businesses that need to make service calls or deliveries. With a 30-mile range on electricity, and the equivalent of 85 mpg, the van would supposedly lower their total cost of ownership by 10 percent to 30 percent. By building it in Indiana, Bright expected to create 675 Midwestern jobs.

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Another EV start-up, Fisker Automotive, is in the fight of its life. This week it hired a new chief executive and said it is seeking new investors, perhaps overseas, to support its ambitious growth plans after it was forced to suspend some development work.

Both companies blamed their financial troubles on bureaucratic gridlock in a U.S. Department of Energy loan program intended to promote the development of cleaner, more fuel-efficient cars in the United States. Three months ago, another fledgling EV maker, Aptera, pulled the plug on its four-year-old business for the same reason.

The Advanced Technology Vehicle Manufacturing program was supposed to provide up to $25 billion in direct loans to help companies both large and small pay for the costs of opening or retooling U.S. factories to produce more fuel-efficient cars and components. The program dovetailed with other government policies requiring big advancements in fuel economy over the next 10-15 years. (If the government was going to add more regulations, at least it would help the companies comply.)

But after an initial burst of lending, the program seems to have ground to a halt. Since Congress authorized funding in December 2008, only five loans totaling $8.4 billion have been made, despite more than 100 applications. There’s been only one loan made in the past two years, a relatively modest $50 million to aid a maker of wheelchair-accessible vehicles that run on natural gas. The rest have been waiting for a decision from the Energy Department — or just given up. Chrysler Group, for example, recently withdrew its application for a $3.5 billion loan. Its finances on the mend, the carmaker was able to borrow $7.5 billion recently from commercial markets.

Intense political heat makes it unlikely any more government loans will be approved before the November election. Congressional Republicans have been scrutinizing various Energy Department loan programs since last fall when Solyndra, a solar panel maker with alleged ties to the Obama Administration, filed for bankruptcy despite receiving a $535 million federal loan guarantee.

There have already been casualties. In January, the Energy Department cancelled a planned loan to the North American subsidiary of Russian steelmaker Severstal to make high-strength steel at a plant in Michigan after Republican lawmakers raised red flags. The Chevrolet Volt has also come under attack from the right, even though it was conceived well before the government bailout of General Motors and was not developed with ATVM loans.

“Solyndra changed the world,” complained Ray Lane, a managing partner at Kleiner Perkins Caufield & Byers, one of Fisker’s major backers, who says the automaker now has no choice but to look to China as a potential source of additional funds. “The Chinese have a lot of money, but they don’t know how to design (electric vehicle) platforms,” he said. Fisker recently hired former Chrysler chief executive Tom LaSorda, who has extensive business contacts in China, to help Fisker move on, with or without help from the U.S. government.

Those who got in early on the ATVM bonanza aren’t complaining. The big winner was Ford Motor, which took the lion’s share of the money with a $5.9 billion loan in Sept. 2009 (shortly after General Motors and Chrysler got their taxpayer bailouts). It used the funds to retool several truck plants for production of small cars and hybrids. Nissan Motor also scored early, receiving a $1.5 billion loan to build an advanced battery plant in Tennessee and produce the plug-in Nissan Leaf nearby. Around the same time, California-based Tesla Motors received $465 million to build its upcoming Model S sedan and related batteries.

Fisker, too, looked like it would get a big helping hand from the government. It won conditional approval for a $529 million loan in 2010, but has been allowed to draw just $193 million of it so far. The government hasn’t released any funds since last May because of delays and production glitches involving Fisker’s first vehicle, the $103,000 Karma. That car, outsourced to a factory in Finland, is now being delivered to North American customers, but executives say they can’t proceed with the next model, to be built in Delaware, until they raise more money — either from the Energy Department or from other investors.

Lane thinks the U.S. is making a mistake by not doing more to ensure advanced vehicle technologies — and the jobs that come with them — stay in this country. “If you believe that in the next few years the car industry is going to become electrified, the U.S. has to take a position on whether we want to own it. My bet is not.”


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