Published on July 24th, 2013 | by Christopher DeMorro2
Congress May Cut Green Auto Loans Program, We Say Good
In 2008 then-President George W. Bush, with approval from a Democratic majority in Congress, funded the Advanced Technology Vehicle Manufacturing loan program to the tune of $25 billion. Five years later and less than half of that money has been given out, and to just five companies. A panel in the House of Representatives wants to cut the funding to put money towards fighting wildfires in the west…and it’s honestly a better use of the money at this point.
The ATVM loan program came at a crucial time for auto manufacturers and green start-ups, providing funding to get new green vehicles off the ground. Ford benefited the most, landing $5.9 billion loan to retool their factories to build hybrid and electric cars. Nissan got $1.4 billion to open the battery manufacturing facility in Tennessee, and Tesla Motors was granted about $465 million, which they have paid off 9 years ahead of schedule.
While, Ford, Nissan, and Tesla are all doing well, two other loan recipients, Fisker Automotive and the Vehicle Production Group, aren’t doing so hot. Fisker has managed to avoid bankruptcy for now, but despite having more than 2,500 orders for their CNG taxis, VPG has run out of money. Fisker is on the hook for $170 million of the $529 million they were granted, and VPG owes the government some $50 million.
All told, the government has loaned out just around $9 billion, and has only “lost” $230 million, not including what will be recovered in bankruptcy or what they made in interested from Ford, Tesla, and Nissan. This is one of those rare, successful government programs, even if it doesn’t seem like it.
The House Appropriations Committee wants to send $1.5 billion to help fight wildfires in the western U.S., and some of that money would come from the AVTM loan program. While Democrats fought to protect the program from Republicans in the past, the government is not actively considering any more loans to automakers or startups right now. So that money is just sitting there, not being used.
I think the program was a success, and that the remaining money ($4.4 billion in cash, $16.6 billion in loan authority) would be put to better use elsewhere. Let’s end this program while we’re ahead of the game for once.
Source: The Detroit News