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DETROIT—Plug-in hybrid delivery van start-up Bright Automotive Inc. is winding down its operations after withdrawing its application for around $400 million from the U.S. Department of Energy.
Bright's application withdrawal follows those of Chrysler Group LLC and General Motors Co. The Rochester Hills, Mich., company blamed an overly rigorous and lengthy process to receive the department's Advanced Technology Vehicle Manufacturing loan program for the decision to shut its doors.
Bright claims in a letter to Sec. Steven Chu, dated Feb. 28, that 18 months earlier the company was told its funding approval was within "weeks not months." Bright said it was asked to meet more and more difficult requirements and finally the tasks became unacceptable and the company's resources were diminishing.
"Last week we received the fourth "near final" Conditional Commitment Letter since September 2010. Each new letter arrived with more onerous terms than the last," the letter reads. "The first three were workable for us, but the last was so outlandish that most rational and objective persons would likely conclude that your team was negotiating in bad faith."
Bright had applied for the loan in December 2008 and executives hoped to build the delivery van by 2014. Aptera Motors, a California-based start-up seeking to build a three-wheeled electric car shut its doors in December saying it could wait no longer for the DOE to approve its loan application.
Chrysler, a company that just reported a $183 million profit in 2011, recently withdrew its $3 billion application for loan funding after waiting several years, saying the terms from the department were too onerous.
"We understand that this is a difficult day for Bright Automotive and their workers. Over the last three years, the Department has worked with the company to try to negotiate a deal that supported their business while protecting the taxpayers," said Damien LaVera, an Energy Department spokesman in a statement. "In the end, we weren't able to come to an agreement on terms that would protect the taxpayers."
As it stands, the $25 billion loan program funded in 2008 to help kick start investment in manufacturing for fuel-efficient vehicles has funded $8.4 billion in investments. The bulk of the loans—$5.9 billion—have gone to Ford Motor Co. to renovate plants. Nissan Motor Co., Tesla Motors Inc. and Fisker also have received funding. A second piece of Fisker's loan has been withheld by the department because the plug-in electric sports car maker failed to meet certain deadlines in the opening of a former General Motors plant in Delaware where it plans to build a new vehicle.
The terms of that loan are being readjusted to reflect a new timetable, an administration official said.
Bright had planned to assemble the vans at a former AM General LLC plant in Indiana and do engineering in Michigan. Bright also has received a $5 million investment from GM.'s GM Ventures investment arm.
The Energy Department's loan programs have been under scrutiny since last September when solar panel maker Solyndra Inc. filed for bankruptcy after receiving more than $500 million in federal loan guarantees. That prompted a federal review of the department's loans conducted by former Treasury official Herb Allison.
Mr. Allison's report found that the department's loans were expected to do well and the losses so far were less than envisioned when they were authorized by Congress. The point of the energy department's loan programs were to provide low interest financing to outfits that might not be able to access private capital either as cheaply or at all because of the risk of the business.
An administration official said each case was different and that the loan program still is operating.
http://online.wsj.com/article/SB10001424052970203753704577253483780855426.html?mod=googlenews_wsj
Bright's application withdrawal follows those of Chrysler Group LLC and General Motors Co. The Rochester Hills, Mich., company blamed an overly rigorous and lengthy process to receive the department's Advanced Technology Vehicle Manufacturing loan program for the decision to shut its doors.
Bright claims in a letter to Sec. Steven Chu, dated Feb. 28, that 18 months earlier the company was told its funding approval was within "weeks not months." Bright said it was asked to meet more and more difficult requirements and finally the tasks became unacceptable and the company's resources were diminishing.
"Last week we received the fourth "near final" Conditional Commitment Letter since September 2010. Each new letter arrived with more onerous terms than the last," the letter reads. "The first three were workable for us, but the last was so outlandish that most rational and objective persons would likely conclude that your team was negotiating in bad faith."
Bright had applied for the loan in December 2008 and executives hoped to build the delivery van by 2014. Aptera Motors, a California-based start-up seeking to build a three-wheeled electric car shut its doors in December saying it could wait no longer for the DOE to approve its loan application.
Chrysler, a company that just reported a $183 million profit in 2011, recently withdrew its $3 billion application for loan funding after waiting several years, saying the terms from the department were too onerous.
"We understand that this is a difficult day for Bright Automotive and their workers. Over the last three years, the Department has worked with the company to try to negotiate a deal that supported their business while protecting the taxpayers," said Damien LaVera, an Energy Department spokesman in a statement. "In the end, we weren't able to come to an agreement on terms that would protect the taxpayers."
As it stands, the $25 billion loan program funded in 2008 to help kick start investment in manufacturing for fuel-efficient vehicles has funded $8.4 billion in investments. The bulk of the loans—$5.9 billion—have gone to Ford Motor Co. to renovate plants. Nissan Motor Co., Tesla Motors Inc. and Fisker also have received funding. A second piece of Fisker's loan has been withheld by the department because the plug-in electric sports car maker failed to meet certain deadlines in the opening of a former General Motors plant in Delaware where it plans to build a new vehicle.
The terms of that loan are being readjusted to reflect a new timetable, an administration official said.
Bright had planned to assemble the vans at a former AM General LLC plant in Indiana and do engineering in Michigan. Bright also has received a $5 million investment from GM.'s GM Ventures investment arm.
The Energy Department's loan programs have been under scrutiny since last September when solar panel maker Solyndra Inc. filed for bankruptcy after receiving more than $500 million in federal loan guarantees. That prompted a federal review of the department's loans conducted by former Treasury official Herb Allison.
Mr. Allison's report found that the department's loans were expected to do well and the losses so far were less than envisioned when they were authorized by Congress. The point of the energy department's loan programs were to provide low interest financing to outfits that might not be able to access private capital either as cheaply or at all because of the risk of the business.
An administration official said each case was different and that the loan program still is operating.
http://online.wsj.com/article/SB10001424052970203753704577253483780855426.html?mod=googlenews_wsj
