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The US Government Accountability Office (GAO) is questioning why Department of Energy (DOE) loan funds are not paying out as planned. The participation hurdle is high, and there’s about $16.6 billion in green vehicle loan appropriations going unused, the GAO found.
The funds come from DOE’s 2005 Loan Guarantee Program and its Advanced Technology Vehicles Manufacturing (ATVM) loan program from 2007. These programs were a directive from Congress, but now House and Senate lawmakers on the powerful appropriations committee are hearing about the programs stalling out. The GAO report also told legislators that the DOE hasn’t “closed on a loan or loan guarantee or conditionally committed to do so under either program since September 2011.”
The GAO had interviewed applicants for the loan programs to evaluate the DOE’s performance and found that it the “costs of participating outweigh the benefits.” Those costs include a “lengthy and burdensome” application and review process and lots of documents needed to apply. The failure of the solar energy company Solyndra was also mentioned as making participants skittish about working with DOE and the Obama administration. It’s not just green car money that’s sitting unused. There is $34.8 billion left in various renewable energy project loans, but here, at least, there are 13 “active” applications.
The DOE might be finished issuing funds through the programs automotive. While the funds don’t have an expiration date, DOE says it will continue to receive applications and it doesn’t plan to use the remainder of the appropriated funds.
Ford, Nissan, Tesla and Fisker did receive ATVM program funds. Tesla is doing well enough to pay the loan off early but Fisker had its funding cut short and is not in a good position to pay it back any time soon.
By Jon LeSage
The U.S. government would be more effective at spurring plug-in vehicle sales if it provided more financial incentives to consumers instead of automakers. At least, that’s the opinion in a Bloomberg News editorial.
Saying that finding alternatives to gasoline “a worthy public goal,” Bloomberg says the government should expand purchasing incentives beyond the $7,500 it provides for buyers of some plug-ins and hybrids. President Obama has said he wants 1 million plug-in vehicles to be on U.S. roads by 2015; the Corporate Average Fuel Economy (CAFE) standards he proposed last year would mandate about a 70 percent fuel economy improvement by 2025. Bloomberg figures the government should hand out money to buyers, not companies, to encourage sales:
Providing loans to companies that can get their own financing in the capital markets is a questionable way to reach [the goal]. A better use of government money would be to encourage consumer demand – by continuing, and expanding, tax credits or other incentives for people who buy vehicles that use little or no gas.
During the past three years, U.S. Treasury Department’s Federal Financing Bank has made more than $8 billion in loans at about a 1 percent interest rate to established automakers such as Ford and Nissan as well as advanced powertrain specialists like Fisker and Tesla, strictly for the purpose of developing electric-drive vehicles. Bloomberg called such a strategy “questionable.” Such automaker loans are guaranteed by the U.S. Department of Energy.
By Danny King
That gift horse? Elon Musk ain’t looking it in the mouth.
The Tesla Motors chief appears to be pretty happy about last week’s presidential election results, saying that four more years of President Barack Obama likely means more electric vehicle (EV) production, Reuters reports. More newsworthy, Musk also said that the first East Coast Superchargers will soon be installed in Washington, DC and Boston.
Musk added that, unsurprisingly, he’d support raising the federal tax credits for EVs to as much as $10,000 per vehicle. That’s about a tenth of the pricetag of a top-of-the-line Tesla Model S sedan, which just won Motor Trend magazine’s 2013 Car of the Year Award. Obama previously suggested the $10,000 level, which would represent an increase of $2,500 to the maximum tax credit currently allowed.
EV production subsidies were a hot topic leading up to the election, with Republican candidate Mitt Romney taking aim at US Energy Department (DOE) loans to companies like Tesla, Fisker and Ford. Tesla received a $465-million DOE loan in 2010.
Not to merely rest on federal loans, Tesla said last month that it will get $10 million from the state of California to upgrade its San Francisco Bay Area factory for Tesla’s Model X crossover, which is slated to start production in 2014.
By Danny King
Thomas R Machnitzki, via Wikimedia Commons
In which we bring you motoring news from around the Web:
• This year’s spike in new car sales is good news for used car buyers. As more people opt for new cars, more vehicles will become available on the used car market, lowering their prices. According to Kelley Blue Book, wholesale auction prices for used cars were at a three-year low as of April, and the average price for a one-year-old used car is 18.5 percent lower than it is for the same model new. Alec Gutierrez, a Kelley Blue Book analyst, estimates that the price drop equates to $110 a month in savings. Of course, used car prices vary from city to city, and some locales offer better deals than others. (CBS Money Watch)
• To what lengths would you go to catch someone’s attention? Paul Scott is willing to chip in more than half of his annual salary — $32,400 — to bend the ear of President Obama at a Democratic fund-raiser. Mr. Scott, a car salesman who is a co-founder of the advocacy group Plug In America, told USA Today that he would do what he could to promote electric cars directly to the president. His money gets him lunch and two minutes of face time with the president, and Mr. Scott said he planned to advocate a carbon tax that would raise the price of fossil fuels and make electric vehicles more competitive. (Torque News)
• Tesla says that by 2016 it will release a smaller electric sedan — currently being called Gen III — with a price of about half that of the luxury Model S already in production. At a shareholder meeting this week, Elon Musk, Tesla’s chief executive, promised a car that was comparable in price to the Nissan Leaf, but with a much longer range, 200 miles. Mr. Musk said he was optimistic that a partnership between Tesla and Panasonic would produce advances in battery technology. (Automotive News)
• Autoblog reports that Ford’s turbocharged 1-liter EcoBoost engine won annual International Engine of the Year honors for the second year in a row. The panel of automotive journalists charged with sorting out the competition were impressed by the power output — 123 horsepower — from the tiny engine. The engine will make its North American debut this year, as a powerplant for the Ford Fiesta. (Autoblog)
• Chrysler has rejected the National Highway Traffic Safety Administration’s request that the company recall 2.7 million Jeeps that the agency says are prone to catching fire in rear-end collisions. A manufacturer’s refusal to comply with N.H.T.S.A. directives is rare, but Chrysler did not agree with the findings of the agency’s investigation, which affects some of the company’s most popular and profitable vehicles. Agency officials have expressed hope that Chrysler will reconsider, but both sides appear to be digging in for a long battle. (The New York Times)