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USA: How a natural gas van came to market with a DOE loan (shocking!)

A year after a startup making natural gas vans, called the Vehicle Production Group (VPG), closed a $50 million Department of Energy loan, the company began producing its inaugural van. Today, the Miami startup, which was the most recent beneficiary of the controversial federal program, is seeing hundreds of vehicles on the road, according to Fred Drasner, chairman of the company.

Founded in 2006, VPG is re-entering the spotlight lately partly because it was among the lucky five that were able to clinch loans from the DOE’s Advanced Vehicle Technology Manufacturing program before the bankruptcy of Solyndra last fall led to a political backlash that seems to have made the DOE less willing to approve more loans. Three companies, including startup Bright Automotive, which wanted to build a plug-in hybrid delivery van, withdrew their applications for a vehicle loan recently, citing the changing and increasingly stringent terms demanded from the DOE. Bright Automotive now plans to shut down.

VPG closed the $50 million loan in March 2011 and was required to raise $10 million in equity before it started drawing down the loan and then another $5 million before it took out the last piece of the loan, said Joe Vecchiolla, VPG’s chief financial officer. The company had raised over $205 million by the time it received its first loan installment, he added. Overall, the startup has raised about $300 million since its inception.

VPG — backed by Perseus, Three Seasons Capital (led by Drasner), T. Boone Pickens and Pickens’ Clean Energy Fuel Corp. — is rolling out its inaugural model, called MV-1, at a time when there is a renewed interest in natural gas vehicles. President Obama is keen on promoting natural gas, which the U.S. can produce in abundance domestically, for producing electricity and powering cars. Last week, General Motors and Chrysler said they will roll out heavy-duty pickup trucks that can run on both gasoline and compressed natural gas


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