Startup Automaker V-Vehicle Hits Roadblock After Government Rejects $321M Loan Request
Plans by the famed Kleiner Perkins VC firm, Google, T. Boone Pickens, and other investors to launch a new automaker are now hanging by a thread.
The Department of Energy has rebuffed San Diego-based V-Vehicle’s request for more than $321 million in loans—throwing into jeopardy the automaker’s ambitious plans to build an “environmentally friendly” car. When V-Vehicle’s founders and investors announced the company’s plans last June in Monroe, LA, Louisiana economic development officials proclaimed in a press release “New American Car Company Will Make History in Louisiana.”
The Associated Press and other news outlets are reporting the DOE turned aside a $241.2 million loan request to revamp an idle headlight plant in northeastern Louisiana and a related $79.9 million loan to coordinate engineering with V-Vehicle’s suppliers. Today, state and federal officials say they’re trying to find out why.
In a statement released yesterday, V-Vehicle says work began last year in Monroe, LA, under $133 million of state tax credits and incentives, where were targeted for completion in the fall of next year. The company says its first production prototype of the V Car is in testing, and national sales were projected to begin late next in 2011.
In its statement yesterday, V-Vehicle also revealed more than it previously has about why its vehicle would be “environmentally friendly,” saying, “The V Car’s miles-per-gallon would be among the best of all four-passenger gasoline-powered vehicles sold in the U.S. today. Annual fuel savings would be 300 gallons per year relative to the fleet average and $4/gallon gas prices would mean $1,200 in annual gasoline savings. In addition, the V Car would meet the PZEV emissions standard, the most stringent tailpipe and evaporative emissions standard currently specified by the California Air Resource Board for gasoline-powered vehicles, which results in 71 percent improvement in NOx emissions. The V Car would save eight billion gallons of gas and 160 billion pounds of CO2 in the 10 years after launch.”
When V-Vehicle made its debut last June at a news conference with Louisiana Gov. Bobby Jindal, the founding CEO, former Oracle executive Frank Varasano, said the startup automaker had lined up $100 million in venture funding. The investors included the Silicon Valley VC firm Kleiner Perkins Caufield & Byers and T. Boone Pickens, the Texas energy maverick. Two Kleiner Perkins partners, John Doerr and Ray Lane, have seats on the company’s board. Google Ventures emerged as an investor a few weeks later, when David C. Drummond, a top Google executive joined the board.
V-Vehicle officials made it clear, however, that the company would need loans under the Energy Department’s Advanced Vehicle Technology Loan Program to move forward with their ambitious plans. The company also got $67 million in economic development incentives from Louisiana.
“We were extremely surprised and disappointed by this decision,” V-Vehicle’s Varasano said in the statement issued by the company. “Our yearlong discussions with the Department of Energy had left us confident and optimistic that the loan applications would be approved.”
In a statement, Louisiana Gov. Jindal called the decision “disappointing and surprising news.”