VPG MV-1Enlarge Photo
Less than a year ago, Vehicle Production Group seemed a success: The startup maker had built 2,500 MV-1 handicapped vans in a year, about one-quarter of them powered by natural gas.
But this past April, VPG shut down due to a cash crunch that meant it couldn't make payroll.
Now, its $50 million loan from the U.S. Department of Energy has been purchased by AM General for $3 million in an auction, giving AM General control of the company and its assets.
AM General, better known as the company that built the HUMMER H1 as well as its military counterpart the Humvee, will continue to produce the wheelchair-accessible MV-1 through a subsidiary to be called Mobility Ventures.
2004 HUMMER H1Enlarge Photo
As an independent company, Vehicle Production Group had received the very last loan approval granted through the DoE's advanced-technology vehicle manufacturing (ATVM) program.
The $50 million loan was granted in February 2011, putting VPG in the company of Ford, Nissan, and Tesla--and the now-struggling Fisker Automotive--as recipients of low-interest loans designed to fund production of more efficient vehicles.
At the time, according to the DoE, VPG planned to expand production to 22,000 vehicles a year and create 900 new jobs.
When it ceased operations, the company had drawn down its entire loan; the DoE was subsequently able to seize $5 million from a company reserve account.
With the sale of the loan to AM General for $3 million, the department will record a $42 million loss on its loan.
The ATVM loan program, created and funded under President George W. Bush, did not begin loaning money until the administration of President Barack Obama.
It has been harshly criticized for loaning money to companies that have subsequently failed--an inevitable consequence of Federal funds substituting for venture capital backing to startups.
Nonetheless, the resumption of MV1 production--with or without natural-gas power--will be welcomed with gratitude by handicapped drivers, who had raved about the vehicle and its design.