Kleiner-Backed V-Vehicle’s Headquarters Remains in San Diego—For Now
San Diego has learned from years of painful experience that being the hometown of a corporate headquarters is an insecure relationship that depends entirely on the fidelity of the company’s CEO. So it seemed inevitable that San Diego-based V-Vehicle would move its headquarters to the San Francisco Bay Area after the wheels came off the automotive startup on March 24th.
That was the fateful Wednesday when the U.S. Department of Energy rejected V-Vehicle’s application for $320 million in loans ($70 million for engineering and $250 million for manufacturing) under the agency’s Advanced Technology Vehicle Manufacturing program.
The DOE decision appeared to take V-Vehicle by surprise. Within a week, founding CEO Frank Varasano left the company—along with Horst Metz, the vice president of assembly operations. Ray Lane, V-Vehicle’s founding chairman and a managing partner at Kleiner Perkins Caufield Byers, stepped in as interim CEO. So it seemed it was only a matter of time until V-Vehicle moved its headquarters from San Diego, where Varasano lives, to someplace near Lane’s office in Menlo Park, CA.
Something like that still seems likely to happen. Lane continues to run the four-year-old startup on an interim basis from Menlo Park, while Kleiner Perkins conducts an active search for a replacement CEO, according to David Langness, a spokesman for V-Vehicle in Los Angeles. Langness tells me that most of V-Vehicle’s corporate functions, including finance and operations, remain at the startup’s leased office space in downtown San Diego’s East Village.
V-Vehicle has raised about $87 million in venture funding, and Kleiner Perkins (which also is backing electric carmaker Fisker Automotive of Irvine, CA) is not the only big-name involved. Other prominent investors include the billionaire oilman T. Boone Pickens (who was calling for a switch to natural gas-powered vehicles), and Google Ventures. But the VC money represents only a fraction of V-Vehicle’s capital requirements, so the Energy Department’s rejection has pushed the startup to the precipice. The company still needs the federal loans, along with almost $90 million in Louisiana state and local government financing, to build its automotive assembly plant in Northeastern Louisiana.
Lane, who was the president and COO at Oracle before joining Kleiner Perkins, travels frequently between Menlo Park and San Diego, as well as Monroe, LA, where V-Vehicle still hopes to refurbish a shuttered plant, and Detroit, where the company also maintains an office. Tom Matano, the celebrated Mazda designer who was recruited as V-Vehicle’s director of design, continues to work for the company in San Francisco, where he also serves as executive director of the School of Industrial Design at the Academy of Art University.
With Lane in the driver’s seat, V-Vehicle submitted a revised application for the DOE loans in mid-May. The company says the revised application would include more operational and financial information.
Lane told The News Star newspaper of Monroe, LA, the revised application would address two key concerns, which he says energy department officials raised in their rejection of V-Vehicle’s original loan application. With V-Vehicle seeking more than $400 million in federal, state, and local government financing, Lane says the energy department wants to see the startup put more of its own skin in the game—ostensibly by raising additional private capital. Lane says the energy department also wants the company to secure a partner to distribute its cars as part of the company’s go-to-market strategy.
The automotive startup also lifted the veil, at least somewhat, on the stealth strategy that Varasano had maintained after V-Vehicle made its debut at a Louisiana news conference in June 2009. V-Vehicle’s launch triggered widespread media attention—and intense speculation—at the time by announcing plans to manufacture a “high-quality, environmentally friendly, and fuel-efficient car” without providing any details explaining how or why the car was environmentally friendly. Because V-Vehicle’s financial supporters included Kleiner Perkins and Pickens, some reports guessed that the company was building an electric vehicle, or perhaps a car powered by natural gas.
After V-Vehicle’s loan was rejected, however, the company disclosed that it planned to build a conventional gasoline-powered, four-passenger sedan. In April, the company also rolled out a prototype V-Vehicle for select Louisiana state politicians and media (although no photographs were allowed). In this respect, V-Vehicle’s leadership has continued to rely on the timeworn stratagem of winning political support for the company by emphasizing the fact that the company will add some 1,400 jobs to an economically depressed corner of disaster-wracked Louisiana.
News reports describe the V-Vehicle prototype as a four-door compact hatchback that is roughly the length of a Toyota Corolla and as wide as a BMW 5 Series, with front-wheel drive and 15-inch wheels. The body is made of a white-colored composite material—not metal—so it is likely lighter than a conventional car. According to one report, V-Vehicle also plans to eliminate the paint facility, an expensive operation that requires extensive environmental controls, by allowing customers to order personalized colors and patterns that would be affixed in a process akin to shrink-wrap.
So now, much depends on the outcome of the startup’s revised application.
Still left unsaid, however, is how a V-Vehicle powered by an internal combustion engine is significantly more fuel-efficient or environmentally friendly than some cars already on the road today. I’m also left wondering how all of this is really different from conventional automotive production—and why what’s been disclosed so far would be considered “advanced technology.”