A DoE loan has helped Tesla move ahead on the Model S but the start-up now hopes to get more cash.
A $25 billion fund created during the Bush Administration to help promote the development of clean, fuel-efficient automobiles has survived an assault by Republican lawmakers who had hoped to chip away $1.5 billion for use in disaster relief efforts.
Conservatives, particularly in the House, have been questioning the Department of Energy’s Advanced Technology Vehicle Manufacturing loan program since it was picked up and championed by the Obama Administration. With the government running a deep deficit they’d hoped to divert some of the fund for relief efforts – including assistance to one of the key Republican’s own state.
But with the White House refusing to give in, that effort has been abandoned – for now. With the program going slower than anticipated, even some clean car advocates are questioning its value and observers say the DoE program could yet face cuts – or even be killed off entirely as the budget debate drags on.
So far, the Energy Department has dispersed just $9.1 billion to six companies that include not only domestic start-ups Tesla Motors and Fisker Automotive but also to Japanese giant Nissan, which is using its loan to help set up an assembly line in Smyrna, Tennessee to produce its Leaf battery-electric vehicle.
Meanwhile, Tesla has confirmed that it is planning to go back and ask for a second Advanced Technology loan on top of the $465 million it previously received from the DoE. That money was earmarked for the development and launch of the Tesla Model S, the maker’s first mainstream battery-electric vehicle, which it intends to bring to market next year. Tesla says the original loan helped create 1,000 new jobs with plans in place to double that figure.
What frustrates some critics is that the DoE has effectively put the review process on hold in recent months. “They just aren’t moving forward,” said a senior official with one of the 18 firms still waiting for a final decision on an Advanced Technology loan. Referring to a strict non-disclosure agreement, that executive asked not to be identified by name.
If all of those pending application were approved it would draw down another $10 billion for the program – though that does not include the unspecified follow-up request from Tesla.
Criticism of the program has come from some surprising quarters, including some active proponents of alternative propulsion. “Washington should never have been picking winners and losers in the first place,” Ron Cogan, Publisher of Green Car Journal, told USA Today.
Where the Bush Administration had been lending support to a wide range of alternative power technologies, including hydrogen fuel cells, the Obama White House has largely cut back on everything but battery technology. The president himself has said he wants to have a million plug-ins and battery cars on the road by 2015.
Supporters say that is paying off and point to the fact that where the U.S. had only one high-volume plant producing advanced lithium-ion batteries a couple years ago there will soon be several more, including one set up in Western Michigan by South Korea’s LG Chem. That factory will supply both General Motors and Ford.
The Energy Department claims such efforts have saved or created as many as 40,000 jobs so far.
With jobs a key issue leading up to the 2012 elections that is a cause celebre. A total of 77 House Democrats wrote to GOP Speaker John Boehner to block the proposed diversion of funds. The move was controversial in part because one of the key proponents of the cuts was House Majority Leader Eric Cantor, who hoped to steer some of the money to his home state.
“We’re working to save a program that was created with bipartisan support and has literally brought thousands of auto jobs from Mexico to Detroit,” said Michigan Congressman Gary Peters.
But while the loan program may be safe – for now – its future remains uncertain as Washington continues to wrangle over budget matters in a highly politicized environment.