VPG Shuts Down; Startup Van Maker Was Backed By DoE Loans

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While Tesla Motors [NSDQ:TSLA] is on a roll--with a rave review from Consumer Reports and a profitable quarter--other startup automakers aren't faring so well.

And now another small car company that received low-interest loans from the U.S. Department of Energy is in trouble and has halted operations.

The Vehicle Production Group, or VPG, built a six-passenger MV-1 handicapped-accessible minivan that ran on gasoline or natural gas.

Between September 2011 and last October, VPG built about 2,500 cars--more than either Tesla Motors or Fisker Automotive built over the same period.

About 75 percent of those cars used a 4.6-liter gasoline V-8 engine; the rest were fueled on natural gas.

The company had hoped to build about 6,000 cars this year; MV-1s can be seen on the streets of New York City and elsewhere, usually serving as handicapped transport.

$50 million DoE loan

VPG received the last loan approval granted under the DoE's ATVM loan program, for $50 million in February 2011.

The loan was expected to help the company build production to 22,000 vehicles, according to the DoE, and create 900 new jobs.

The company halted production late last year; it shut down in April because it couldn't make its payroll, according to former CEO John Walsh in a Bloomberg interview.

VPG had drawn down its entire loan amount, Walsh said, but made no repayments.

He also told Bloomberg that the Department of Energy had seized $5 million in a company reserve account.

VPG has not filed for bankruptcy, and Walsh claimed that two companies are interested in VPG's assets.

 

MV-1 Wheelchair-Accessible Mobility Vehicle

MV-1 Wheelchair-Accessible Mobility Vehicle

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Ford, Nissan get lion's share

Other car companies that received DoE loans are Fisker, Ford, Nissan, and Tesla.

Together, Ford and Nissan have received $7.3 billion of the $8.4 billion loaned under the program, which has not authorized any new loan commitments in more than two years.

Ford, Nissan, and Tesla are thus far paying back their loans on schedule or planning to--none of those companies will comment in detail on its payments--and startup Tesla has said it will pay off its loans ahead of schedule.

Fisker Automotive, on the other hand, is in dire straits.

The company had its loans frozen for missing deadlines, halted production of its Karma luxury range-extended electric car last summer, laid off most employees last month, and has not been able to find a financial savior.

2012 Fisker Karma in Costco parking lot, Santa Monica, California [photo: Chris Williams]

2012 Fisker Karma in Costco parking lot, Santa Monica, California [photo: Chris Williams]

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Romney's "loser" companies

As Bloomberg notes, "If both Fisker and VPG default on the entire amounts they’ve received, the $217 million lost would be less than the $10 billion reserve Congress built into the program and about 3 percent of the amount lent."

The DoE low-interest loan program to encourage production of advanced-technology vehicle manufacturing has been widely slammed by a variety of politicians, generally Republicans.

Fisker and Tesla were cited as "losers" by Mitt Romney, the unsuccessful Republican candidate for president, during last fall's presidential debates.

Bloomberg notes that Sen. Jeff Flake [R-AZ] had pledged to intensify efforts to shut down the DoE loan program.

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