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Fisker Karma
This is the same program that funded Fisker Automotive

South Dakota's Republican senator wants to terminate the federal loan program that gave millions of dollars to Fisker Automotive -- an automaker that has failed to produce a car in over a year and is now missing loan payments to the U.S. Department of Energy (DOE). 

According to The Detroit News, Sen. John Thune (R-S.D.) wants to get rid of the $25 billion Advanced Technology Vehicle Manufacturing loan program due to failures like Fisker Automotive wasting taxpayer money. He has already proposed an amendment that would “permanently end the ATVM program and save taxpayers from paying for more of President Obama’s bad green-energy bets.”

Thune's amendment comes after the DOE said it would auction off Fisker Automotive's $168 million unpaid loan earlier this week. DOE plans to launch the auction in early October. 

Fisker Automotive is an auto startup that received $529 million in DOE loans back in April 2010. However, Fisker fell a little behind on its production schedule, and in May 2011, DOE froze the loans due to "unmet milestones." Fisker had only drawn $193 million of it at that point. It hasn't been able to build a car since July 2012, and started looking for a buyer so it doesn't have to claim bankruptcy.

But Fisker isn't the only auto company that failed after receiving money from the Advanced Technology Vehicle Manufacturing loan program. Vehicle Production Group LLC -- which is a Michigan-based startup building wheelchair-accessible compressed natural gas vehicles -- was awarded $50 million in loans back in March 2011, but has since halted production.

Senator John Thune

DOE sold its unpaid $50 million loan for Vehicle Production Group LLC to AM General for $3 million earlier this month. According to The Detroit News, taxpayers lost about $42 million on that sale.

The Advanced Technology Vehicle Manufacturing Program was created by Congress in 2007 in an effort to reach the goal of 1 million EVs on U.S. roads by 2015, but the program hasn't made a new loan since March 2011. This is mainly due to the fact that two of the five companies (Fisker and Vehicle Production Group) that received government loans stopped production. 

The Obama administration received a lot of flak for these failures, but the program wasn't all bad. The other three loans -- $5.9 billion to Ford, $1.4 billion to Nissan and $465 million to EV startup Tesla Motors -- proved to be successful. Tesla even managed to pay its full sum back nine years early, which was a great feat for a startup. 

U.S. Energy Secretary Ernest Moniz said last month that the Obama administration is interested in reviving the $25 billion Advanced Technology Vehicle Manufacturing Program. He noted that it plans to draw a new round of loan requests (but is not actively considering any applications for retooling loans) and reexamine its lending criteria in order to avoid problems it encountered in the past. 

Source: The Detroit News

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RE: Bad Loans
By Reflex on 9/19/2013 1:51:57 PM , Rating: 5
The transcontinental railroad was government backed, both in the seizure of land and the loans required to build it. It was a huge project that at the time did not make a ton of sense as commerce on the west coast was miniscule compared to the east coast, yet we spent billions connecting the two rather than letting 'private industry' do it themselves.

The Internet was much the same, it took decades before the government investment actually made any sort of sense for the average American.

Electric cars and other advanced transportation technologies are in a similar position. In another few decades it will seem obvious and we will wonder why we did not do it sooner.

Also, my bet is that New York City's drivers put more into the federal gas tax than their MTA receives out of it, and that on balance funding the MTA takes enough cars off the road that it likely is cheaper to fund the MTA than to not fund it and have the roads receive more wear and tear as a result(and require more expansion).

RE: Bad Loans
By Solandri on 9/19/2013 2:41:53 PM , Rating: 1
I agree with you about the railroads, but the Internet was a Department of Defense project. They wanted to create a nationwide communications network which would still work even if large segments of it were wiped out in a nuclear strike. There was never an expectation that it would ever be paid back in usefulness to the average American. That it turned out that way was just happenstance.

Electric cars and other advanced transportation technologies are in a similar position. In another few decades it will seem obvious and we will wonder why we did not do it sooner.

This is the problem I have with electric vehicle proponents. They are absolutely certain that EVs are the correct solution and thus are incapable of seeing any risk in investing in them.

I'm not so sure. If cellulostic ethanol is ever made to work and there isn't an order of magnitude improvement in batteries, EVs are dead. We could take all the waste plant matter we currently burn or dispose, and turn it into fuel for ICE cars. Yes it's green. Plants are basically self-propagating solar collectors who store that sunlight in the form of sugar. (Your body uses short sugars for energy. Carbohydrates like pasta are just long sugars your body can break apart into short sugars. Cellulose is an even longer sugar which most animals can't break apart into short sugars. The energy is still there though - it's why wood burns so well.)

Yes that's a big if, but it's not that big. Termites already do it (convert wood to sugars). We just need to figure out a way to do it cost-effectively on a massive industrial scale.

RE: Bad Loans
By Reflex on 9/19/2013 3:32:03 PM , Rating: 2
Waiting on holy grail projects like cellulostic ethanol is letting the 'perfect' impede the 'better'. Furthermore, even if such a process were perfected, it could just as easily, and more efficiently, be applied to biomass energy production and produce electricity at central plants rather than in the car itself.

A huge shift to electric cars would have no impact on other solutions, if they make sense they will also be able to contribute, investing in cars today that are cleaner and more efficient is smart, even if something better comes along together.

RE: Bad Loans
By M'n'M on 9/19/2013 3:35:47 PM , Rating: 2
They are absolutely certain that EVs are the correct solution and thus are incapable of seeing any risk in investing in them.

And if not ethanol then some other bio-fuel. Or hydrogen and fuel cells. There's been other technologies hyped by the Govt at one time or another. They all seem to fall by the wayside when the next "fad" comes along. Perhaps rightfully and perhaps just because they didn't deliver the goods in the politically expedient time available. Alas once falling out of Govt favor (and not able suckle on the Govt $-teat) it becomes hard for them to compete and realize whatever potential they may have had.

RE: Bad Loans
By Samus on 9/20/2013 4:49:49 AM , Rating: 2
The internet became a Department of Defense product. It started as an academic study.

RE: Bad Loans
By Just Tom on 9/21/2013 11:42:08 AM , Rating: 2
The redundancy built into the original ARPANET was not to survive a nuclear war but to survive crappy equipment. The purpose of the network was simply to facilitate research, nothing more. You have to remember at the time fast computers were exceedingly rare and many researchers did not have one available locally. ARPANET mitigated that to a great extent.

RE: Bad Loans
By amanojaku on 9/19/2013 2:42:04 PM , Rating: 2
I am unaware of any land seizure, although I would not be surprised. It would also be valid, falling under eminent domain, since it would benefit the nation as a whole. The only requirement would be compensation for the land owner. The subsidies were, in fact, government bonds, not taxes. This means private companies and individuals bought them and helped fund the railroads. The government would later pay back the bond owners, and this was a common practice for more than just railroads.

And it made plenty of sense to support commerce on the west coast; you forget about the gold rush, and all of the construction that surrounded it. The gold rush alone had a global impact.

The origin of the Internet was not the same as the railroads. There was no commercial intention for the Internet. It was purely for academic and research purposes, and the public could not access it. Commercial, public access to the Internet began with private companies and private funds.

As to NYC drivers, there aren't that many. There simply isn't enough space for cars. Most of the drivers come from out of state or upstate, and they park in overpriced garages. The bulk of the cars in NYC are taxis or delivery trucks. Clearly, you don't live here.

RE: Bad Loans
By Reflex on 9/19/2013 3:29:53 PM , Rating: 2
1) The transcontinental railroad was built a decade after the California gold rush, it was long over and the economy had cratered at that point. Building it to 'service the gold rush' was not a concern. It was a purely speculative endeavor, and one that ended off paying very well.

2) At the time the west coast did just fine by shipping. The railroad certainly made things cheaper, but private industry had already built a sustainable economy without it. Many of the arguments I see against EV investment are that private industry needs to be the only driver of it, that government foresight has no place in it. The same could have been said about the TR.

3) The internet was built for multiple purposes, but many people back then saw long term potential commercially. Read interviews with many of the founding developers and engineers, or simply read how Xerox viewed its potential. In the 60's and 70's lots of people involved realized and even planned for a commercial future.

And finally, I do get your point about NYC. My point is that the reason why there can be so few roads is because of the MTA. Without it, NYC would have to spend a fortune building and maintaining roads. So a small investment in the MTA saves the nation a huge investment in NYC infrastructure. Its a smart way to spend the money.

RE: Bad Loans
By amanojaku on 9/19/2013 5:10:19 PM , Rating: 2
1) The Gold Rush officially ended in 1855, but the effects were permanent (as of the time of this post, anyway; Lex Luthor might still want to blow up the west coast with nukes to create Otisburg). San Francisco went from a village or town of a few hundred to a city of thousands in just five years. California gained 300,000 new residents and became the 31st state. People flocked from all over the world, either to mine for gold, or support those who were.

The economy did not crater. It simply became impossible for individual immigrants or emigrants to mine for gold because all of the land was taken. Only large organizations could profit from gold since they owned the mines. But the economy thrived independent of gold. Agriculture and a short oil boom helped grow the economy further.

The railroad was built in response to the clearly established community, created by the Gold Rush. The railroad took six years to build, from 1863-1869, and was preceded by surveys that began in 1853. The Gold Rush was officially over, but California had established itself as an economic center.

2) I'm not sure what you mean by "did just fine by shipping". The only direct route to the west coast was to walk or ride a wagon, both of which were dangerous due to the desert and Native Americans. Shipping from east to west meant loading a boat, sending it to Colon, Panama, unloading, loading onto a train, sending it to the Port of Balboa, unloading, loading onto a boat, then sending it to San Francisco. It was time consuming and expensive when compared to a train that just went east to west.

3) The government never intended for the Internet to be commercial. It certainly didn't prevent a commercial internet, but read the acceptable use policies for NSFNET, ARPANET, etc... The individual techs may have thought of commercial uses, but the Federal Government, the financial sponsor, did not.

4) You still don't get it. New York City has plenty of roads. It's just that the place is so densely populated that it is impossible to create enough roads to support enough drivers to pay for them. The MTA was not created to reduce road creation and maintenance; it was created because without mass transit NYC simply would not function. It's not a small investment, either, and I still don't see why the entire United States is forced to pay for one city's infrastructure, trains, roads, or otherwise.

RE: Bad Loans
By Mint on 9/19/13, Rating: -1
"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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