WASHINGTON — The U.S. Department of Energy wants auto suppliers to know that it still has $16 billion in low-interest financing available to support efficient-vehicle programs, and it wants them to step forward for a share of those funds.
The department's lending authority comes under the Advanced Technology Vehicles Manufacturing Loan Program, which Congress created in 2007.
Early in the Obama administration, the Department of Energy used the program to lend about $8.4 billion to Ford, Nissan, Tesla Motors and Fisker Automotive. Suppliers were always eligible, but none secured funding.
Now, under Energy Secretary Ernest Moniz, the program is being overhauled to make it easier to fund production of technologies such as lightweight materials, efficient engines and low-friction tires.
Moniz announced the program changes on Wednesday during a speech to the Motor & Equipment Manufacturers Association, or MEMA, a trade group representing auto suppliers.
“The U.S. auto industry has evolved since the ATVM program was established,” Moniz said in a statement. “Today we are presented with an opportunity to hit the accelerator on U.S. auto manufacturing growth.”
One supplier is in active talks about a loan, Peter Davidson, executive director of the DOE's Loan Programs Office, told Automotive News in an interview today. He would not identify the company. Automotive News is a sister publication of Plastics News.
Davidson said the department has been making the rounds with other suppliers to inform them that the automotive program is not dormant -- even though it hasn't approved a loan since March 2011.
“People have been very appreciative,” Davidson said. “They didn't seem to realize that we were still open for business. Now they know: We are open for business.”
The changes that Moniz announced April 2 include legal clarifications to show that suppliers are eligible for the program, a promise to respond more quickly to applicants and the creation of a new online application portal.
“We are pleased that the secretary is reaching out to the supplier industry,” Ann Wilson, vice president of government affairs at MEMA, wrote in an e-mail to Automotive News. “We continue to believe that this is an important program of which suppliers must be an integral part.”
The program has had ups and downs.
Tesla received a $465 million loan from the program in January 2010 to launch the Model S electric sedan. The car's warm reception has made Tesla a darling of investors, and the company repaid its loan last year, nearly a decade ahead of schedule.
But another of the Energy Department's loans, for $529 million, was given to plug-in hybrid maker Fisker Automotive, which recently went through bankruptcy restructuring.
Fisker drew down $192 million before the department stopped providing funding to the struggling company. The government recovered $53 million of those funds in Fisker's bankruptcy proceedings, which culminated in the sale of the company to Chinese auto-parts conglomerate Wanxiang Group.
The ATVM program was created in 2007 with firm backing from environmental and labor groups. Environmentalists saw the program as a way to put cleaner cars on the road, while labor groups viewed it as a way to spur investment in U.S. manufacturing. The department received $25 billion in lending authority.
To qualify for a loan, a company would need to contribute to vehicles that are 25 percent more efficient than equivalent vehicles made in 2005. Davidson said the DOE is now clarifying that even if a component is sometimes used in vehicles that don't meet that standard, it will still consider a loan, and will simply prorate the loan amount to reflect the components used in eligible vehicles.
Roland Hwang, director of the transportation program at the Natural Resources Defense Council, said environmental advocates used to worry that suppliers would receive funding for parts that were used to make cars more powerful -- not more efficient.
But now that stricter fuel economy standards are in place, he said, those concerns have dissipated. He praised the DOE's plans.
“We're increasingly seeing suppliers shoulder a heavier burden in meeting these new fuel economy standards,” Hwang said. “They're facing increasing demand for these components and bottleneck situations in terms of their capacity. Focusing on suppliers seems like a very appropriate use for this program.”
