U.S. Energy Dept revamps auto loan program, eyeing new applicants

WASHINGTON, April 2 Wed Apr 2, 2014 3:30pm EDT

WASHINGTON, April 2 (Reuters) - The Obama administration said on Wednesday it has revised its review process for advanced vehicle loans, hoping to jump-start a stalled program that still has more $16 billion in available funding.

The Department of Energy (DOE) sent a letter to the Motor and Equipment Manufacturers Association on Wednesday to clarify that a wide range of component makers would be eligible for loans through the program, as well as outlining measures to improve communication with applicants and speed up reviews.

"The U.S. auto industry has evolved since the (advanced vehicle) program was established and today we are presented with an opportunity to hit the accelerator on U.S. auto manufacturing growth," Energy Secretary Ernest Moniz said in a statement.

Last year, U.S. lawmakers sought to expand the program, which offers loans to support of the manufacturing of more highly energy-efficient vehicles, to include component manufacturers further down the supply chain as well as makers of medium- and heavy-duty trucks.

That legislative effort has not moved ahead, but the DOE stressed on Wednesday that many component technologies such as advanced engines and electronics and fuel-efficient tires could receive funding through the program.

After doling out more than $8 billion in loans to auto companies between 2009 and 2011, companies such as Chrysler Group LLC abandoned their DOE loan applications to pursue other options. Some companies have complained the government's review process was too slow and opaque.

To address these concerns, the DOE has updated their description of the program to include more details about the application process. It will also offer pre-application consultations with potential applicants.

The DOE has launched a website for auto loan applications to help speed up processing.

The success of Tesla Motors Inc, an auto start-up that repaid its $465 million loan last year, has bolstered the program.

Critics, however, have focused on the failure of DOE-backed Fisker Automotive, a maker of pricey plug-in hybrid sportscars. The department promised the company a $529 million loan, but it froze Fisker's credit line in mid-2011 as the company faced financial challenges.

Fisker's collapse and the high-profile failures of other Department of Energy investments, such as solar panel maker Solyndra, led the DOE to reform its funding programs and offer more stringent conditions for loan recipients.

But the combination of tougher financial standards and heightened political scrutiny seem to have stifled the auto loan program.

The DOE has stressed that most of its loans have been successful and its losses have been far below the levels budgeted by Congress when the programs were created. (Reporting by Ayesha Rascoe, editing by G Crosse)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.