Print 22 comment(s) - last by TechIsGr8.. on Jan 25 at 11:42 AM

Only four companies, including Tesla Motors Inc., have received loans from the DOE, despite the fact that many have asked for funds.  (Source: Tesla Motors Inc.)

The Department of Energy has sufficient money to fund at least $18B USD in loans, but it has only given out $8.3B USD, thus far. The process is so difficult, some smaller companies have reportedly given up.  (Source: Grunley)
The DOE received billions to give out to high-tech automotive firms, but has only given out a small fraction of that money

Taxpayers wrote automakers, suppliers, and start-up companies a loan check for $42.7B USD to develop fuel-efficient vehicles.  While the public has mixed feelings on the government stepping into the free market, it is not unusual -- Chinese, Japanese, South Korean, and European automakers (virtually every global automotive power) enjoy similar high-tech loan programs.

And regardless of your feelings on the loan program itself, what likely will disturb critics and advocates alike is the fact that most of the money granted from Congress is sitting in the U.S. Department of Energy's bank account, unused.  

The DOE has been hesitant and unwilling, thus far, to give out the funds in many cases.  Some have accused it of hoarding the money and hurting start-ups.

Thus far companies have requested $25B USD of the $42.7B USD, but the DOE has only delivered approximately a third of the amount -- $8.5B USD.  

More troubling still is the fact that smaller companies have been entirely overlooked, while the government has shown favoritism to a handful of elite automakers.  Thus far the only parties to receive loans are Ford, which asked for $11B USD and received $5.9B USD in September 2009; Nissan which received the $1.4B it asked for in January 2010; California-based Tesla Motors which received $465M USD in January 2010 to develop its next generation electric vehicle, the Model S; and Fisker Automotive, who obtained a $529M USD loan in April 2010 to retool a former General Motors factory in Delaware, which it will use to produce its upcoming EV.

Smaller companies have thus far not received funding, though reportedly many have applied.  John D. Thomas, CEO of ALTe LLC, spoke with The Detroit News on this trend.  Mr. Thomas's firm is among the smaller firms who requested funding, but hasn't received it.  While he says his company won't fold if the loan request goes unfilled, he says other firms may be less fortunate.  He states, "Some entrepreneurial startup companies are really struggling to stay alive long enough to realize the finish line."

The lone sign of hope for these firms is Vehicle Production Group LLC, an Indiana startup that may soon receive a loan to build a wheel chair powered by compressed natural gas.  While the loan isn't yet official, the DOE announced it in November.

The Detroit News used The Freedom of Information Act to obtain testimony by members Congress discussing the DOE's laggard response.  States Sen. Dianne Feinstein, D-Calif., "Reviews of pending applications are falling behind schedule. On multiple occasions, the department has missed internal deadlines for initial decisions, term negotiations, final decisions and loan closure."

She accuses the DOE of not only lacking a timeline for application approval, but says that the process to get a loan is overly "difficult".

Sen. Evan Bayh, D-Ind. adds in a letter of concern to Energy Secretary Steven Chu, "While the U.S. has the technology and expertise in this industry, it lacks domestic production capacity and a sustained federal commitment. Consequently, our nation is falling behind."

A DOE spokeswoman, Stephanie Mueller claims the situation is improving.  And she reiterates, "[The DOE] has committed and closed four totaling $8.3 billion [in loans]."

Even some larger companies are becoming frustrated by the hold-up.  The cash-strapped Chrysler Group LLC asked for $8.55B USD, then reduced its request to $3B USD to try to get it cleared faster.  The automaker has already committed to projects expecting to get the loan.  Yet, no loan has arrived, even as its profitable peers Ford and GM have seen their requests fulfilled.

Meanwhile some small businesses are giving up.  Illinois auto supplier Tenneco Inc. was told after an initial application that it would get $24M USD to conduct research into fuel-efficient parts at its engineering research center in Grass Lake, Michigan and to produce the parts at its Marshall, Michigan plant.  The loan process, though, fell through and rather than try to re-request the money the company abandoned hope of federal funding and went off searching for private funding.

And a second crisis is looming.  The DOE says that the loan program is more expensive than previously expected, so they will likely only be able to give out around $18B USD in total loans, versus the expected $25B USD.

Anyone familiar with the incredible success of China's ever expanding high-speed rail program realizes that government funding can be the key to high tech industrial success, if properly applied.  But the U.S. government thus far is showing itself to be an inefficient machine when it comes to promoting high technology in the automotive industry.  As the result, business leaders and members of Congress warn our nation may fall behind its foreign competitors.

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And -
By Dr of crap on 1/24/2011 12:28:43 PM , Rating: 5
I'm sorry, but is this something new?

Didn't we know how bad the govt does things?!?


RE: And -
By Klinky1984 on 1/24/11, Rating: 0
RE: And -
By toyotabedzrock on 1/24/2011 1:41:50 PM , Rating: 1
It is being used up by people who have to read thousands of BS requests from companies that want you to buy a wheel chair powered by compressed natural gas .

It takes time to read all requests and handle legal complaints. It does not evaporate. The companies know this, you however do not which makes you into their puppet!

RE: And -
By HrilL on 1/24/2011 4:29:26 PM , Rating: 5
Are you kidding me? you Think 7Billion is okay to be spent on administration costs? How many people are managing this program? Even if they had 1000 people at 50K Plus insurance and taxes a makes the labor cost about 100K per person so thats 10 Million labor costs. Office space and supplies with brand new computers is about another 20K per person. So thats 120Million an year... I somehow doubt they have 1000 people working on this and I also doubt the average salary is 50K. So where in the hell is all the money going?

Los Alamos National Laboratory has roughly 9,000 employees plus 650 contractors working at with a approximate annual budget of 2.2 Billion. They actually produce something and buy super computers every few years for millions of dollars...

Government waste at its finest...

RE: And -
By Cygni on 1/24/11, Rating: 0
RE: And -
By HrilL on 1/24/2011 7:33:47 PM , Rating: 3
The DOE says that the loan program is more expensive than previously expected, so they will likely only be able to give out around $18B USD in total loans, versus the expected $25B USD.

Lets see we can do simple math can't we? 25-18=7. When you're trying to flame someone maybe you should read the article yourself first. Gooo get em tiger!

RE: And -
By Kurz on 1/24/2011 1:55:59 PM , Rating: 3
When has ever been wide spread notion of holding the government accountable? You can't fight the state except from inside by changing policies.

Sorry a centraly planned economy is always doomed to failure.

By theapparition on 1/24/2011 12:34:26 PM , Rating: 2
And a second crisis is looming. The DOE says that the loan program is more expensive than previously expected, so they will likely only be able to give out around $18B USD in total loans, versus the expected $25B USD.

Yeah, 7 billion extra, just to administor a loan program of 25B. Only the government could be that inefficient.

And China is only able to be somewhat efficient with national programs because they have a government that ramrods the legislation, doesn't require regulations, steals company IP and allows basically slave labor. We pay more, but don't end up with antifreeze in our toothpaste. You take your pick there.

By SunLord on 1/24/2011 1:56:15 PM , Rating: 2
One wonders why we have so much debt given a $25billion loan program requires $7billion in administration costs. The $18 billion in loans in theory will be paid back while the $7billion in wasted bureaucracy is just more useless debt. It makes me wonder what how they're managing to piss away $7billion because it's gotta be pretty impressive.

By indignation on 1/25/2011 1:12:07 AM , Rating: 2
The original amount was $42.7B, they expected to be able to give out $25B but in the end, find that they can really give away only $18B

If you must put this in Chinese perspective, such a large scale corrutpion will warrant capital punishment on some of the biggest figures involved.

By Strunf on 1/25/2011 7:48:46 AM , Rating: 2
If you must put this in Chinese perspective, such a large scale corrutpion will warrant capital punishment on some of the biggest figures involved.

Only if the said big figures aren't part of the gouvernement...

Time to act responsibly
By Beenthere on 1/24/2011 12:36:22 PM , Rating: 2
U.S. tax payers didn't give the Feds permission to piss away our money on foolishness. No company should get a free ride. Any disbursement of U.S. tax payer dollars should be to a business entity that can prove it can generate a profit and repay the loan in a timely manner.

Bama is a fool and he believes in socialism but tax payers do not. It's time to act responsibly for a change.

RE: Time to act responsibly
By Klinky1984 on 1/24/2011 1:07:46 PM , Rating: 2
I know, he should have just given the money to Halliburton instead, definite profit maker... Just the taxpayers don't see those profits, they pay them.

Wheelchairs powered by natural gas?! Not!!!
By rttrek on 1/24/2011 1:23:30 PM , Rating: 2
... Vehicle Production Group LLC, an Indiana startup that may soon receive a loan to build a wheel chair powered by compressed natural gas.

VPG makes cars (optionally powered by natural gas) designed for transporting wheelchairs. They don't make wheelchairs.

Sounds like fun tho! Reminds me of the gasoline powered wheelchairs used in "Silent Movie".

By bah12 on 1/24/2011 1:50:20 PM , Rating: 2
LMAO. I thought that paragraph sounded awfully "Mickish" (hope I just coined a new DT term). $20 says he doesn't fix it.

By toyotabedzrock on 1/24/2011 1:35:26 PM , Rating: 2
WTF do we need a wheel chair powered by compressed natural gas for?

Perhaps these dumb ass gas industry companies should not be jamming up the process with BS requests for money!

I hope everyone here sees how a group of bad actors are able to cripple the government and create the illusion that it is the governments fault.

By Galcobar on 1/25/2011 5:24:14 AM , Rating: 2
As noted just three comments above -- the problem with a CNG-powered wheelchair lies in the failure of reading and writing by the author of this blog.

The company mentioned doesn't make wheelchairs, they make vehicles to transport wheelchairs. Think specialized cargo van.

By siuol11 on 1/24/2011 5:48:28 PM , Rating: 2
But Chrysler? Haven't we thrown enough money down that bottomless pit?
The past few years have been nothing but a mild 300C update, 3 supposedly production ready EV's that we never heard from again, and oh yeah... the top "talent" still getting their incredible paydays. They can go to hell as far as I'm concerned, and not a moment too soon.

By DrApop on 1/25/2011 9:42:26 AM , Rating: 2
Why is Nissan getting any money at all? Did a US company buy Nissan? I thought it was a Japanese company?

Oh yeah
By TechIsGr8 on 1/25/2011 11:42:13 AM , Rating: 2
I almost forgot the corporate mantra: Keep your government hands off our government socialism... where are the "free market" freaks when we need them?

This is a bad thing?
By Ammohunt on 1/24/2011 1:59:30 PM , Rating: 1
i think this money should be kept and put to good by paying on the national debt!

I have no problem...
By rvd2008 on 1/24/2011 2:34:02 PM , Rating: 1
with Government holding on tight to cash. Better be safe than sorry.

DailyTech and others have "Save the World" tech article everyday. Most are crap (eestore anyone?). It is only fair G-man check twice "the invention".

On the other hand, Nissan, Ford etc demonstrated results and got the money. So it works in a way.

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller

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