Rejected For Loans Tesla Got, Inflatable Car Firm Sues DoE 3 Years Later

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XP Technology concept vehicle

XP Technology concept vehicle

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Oh, those DoE loans. They arose in the recent U.S. presidential debate--not just once or twice, but three times--and continue to generate debate.

So here's more fuel for the fire: A company rejected three years ago for loans is now suing the DoE.

Its proposed product? An inflatable electric car.

Two applications by XP Technology for low-interest loans of $25 million and $45 million under the DoE's advanced technology vehicle manufacturing program were rejected in August 2009.

At the time, XP issued a press release saying it was "extremely disappointed," and then vanished from sight. Its website is no longer active.

Now, three years and three months later, the company has filed suit, alleging corruption and negligence at the U.S. Department of Energy.

(You can view the lawsuit here.)

The suit claims that loans awarded to Ford, Nissan, and Tesla Motors [NSDQ:TSLA] in June 2009, and to Fisker Automotive in September that year, were based on "manipulated reviews" and that applications by other firms were "stalled" to protect favorites.

But there's more: The lawsuit alleges that XP staff "received threats and personal attacks" when they reported these allegations--to the U.S. General Accounting Office, the Justice Department, the Senate Committee on Energy & Natural Resources, even the White House Press Office, and more.

Scott Douglas Redmond, a manager at XP Technology, told Fox News that it has both 5,000-plus documents and witnesses who will back up its claims.

It will reveal that material and those persons during court proceedings, he said, if its motion to take the case to trial is granted.

XP Technology had hoped to develop what it called "the safest, most affordable vehicle with the lowest total cost of operation and the best power-to-weight ratio powered by alternative energy."

The core technology was a rigid-framed vehicle with body panels made of expanded foam covered in the inflatable airbag material used to protect the 1997 Pathfinder probe as it landed on Mars.

1,000th body for 2012 Tesla Model S on display at Tesla Motors factory, Fremont, CA, Oct 28, 2012

1,000th body for 2012 Tesla Model S on display at Tesla Motors factory, Fremont, CA, Oct 28, 2012

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The company claimed the 1,500-pound car had been in development for a decade, and that its battery pack would deliver roughly 125 miles of all-electric range with four passengers on board.

It also proposed an optional range-extending auxiliary power unit fueled by hydrogen.

Tesla Motors received the loans that XP was denied, and that approval recently became an issue in the U.S. presidential election, when Republican candidate Mitt Romney called Tesla a "loser" company. Romney lost the election.

It has since made regular interest payments on its $465 million in loans since they were first due last February, and will begin paying back principal in January, the company says.

XP admitted in 2009 that it pursued the DoE loans because they were the cheapest money around, saying in its release, "It is well known that DOE funding cannot be surpassed in terms by any current bank or investor in this economy."

With all the political controversy around the DoE's loans, that era is likely over.

Now all that's left is for the lawyers to wrangle.

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