Next Autoworks has developed a low-cost, spaceframe-based small car.
Next Autoworks is scrambling to see if there’s a way to raise some desperately needed capital after withdrawing its request for a Department of Energy loan, money the automotive start-up was counting on to begin producing a new line of low-cost, high-volume cars.
After getting earlier indications that the loan request under the DoE’s Advanced Technology Vehicle Manufacturing (ATVM) program would likely go through, Next was given word, earlier this week that the application would instead be rejected. Sources close to the project suggest Next – and others seeking DoE loans – have been hamstrung by the political turmoil in Washington.
“New companies with new ideas are the lifeblood of future job creation in the United States,” said Kathleen Ligocki, Next Autoworks Company’s CEO and a one-time senior executive at Ford Motor Co. “The most powerful funding combination is one of public-private partnership, especially in capital-intensive manufacturing industries which have the most power for permanent employment for the broadest group of people. Still, in the current reality, there are many demands on public capital and choices must be made.”
Next, based in San Diego, had been developing a new, low-cost vehicle design that it claimed could be produced much more simply than with conventional manufacturing procedures. The start-up was prepared to use a one-time General Motors parts plant in Louisiana for the project.
But despite significant support from the California venture capital giant Kleiner Perkins Caufield Byers LLP, Google Ventures, L.P., T. Boone Pickens, James Davison, and others, the project – originally known as V-Vehicle – was counting on the ATVM loan to kick-start its manufacturing efforts.
The question is whether there will be alternative private sources now that the government loan program has been taken off the table.
The ATVM program has become enmeshed in political controversy in recent months, especially in the wake of the bankruptcy of solar cell manufacturer Solyndra, which received more than $500 million in loans.
But even before that company collapsed the DoE appeared to be pulling away from funding start-ups, especially in the automotive sector.
Early on, the government program provided assistance to major makers Nissan and Ford, following up with loans for start-ups Fisker Motors and Tesla Automotive. But other applications have been on hold for automakers large and small, from Chrysler to Next Autoworks.
“They’ve been giving billions-dollar loans to energy infrastructure projects that create 20 jobs while refusing to fund automotive projects that can create thousands of jobs,” said a source familiar with the program asking not to be identified. “Maybe the government doesn’t care about the industrialization of the United States. Yet a lot of other places see this as critical, and not just Russia and China.”
The Next Autoworks board is expected to make a decision on whether the company can move forward, and if so, how, sometime shortly after the Thanksgiving holiday.