DETROIT (Reuters) - Vehicle Production Group LLC, a maker of wheelchair-accessible vans that received $50 million in low-interest federal loans, has closed its doors after running out of cash.
The company made the six-passenger MV-1 van that ran on compressed natural gas. Investors in VPG include billionaire T. Boone Pickens.
The U.S. Department of Energy confirmed news of VPG’s closure, first reported by the newspaper USA Today.
“While this is unfortunate news about a very promising company, it is the exception rather than the rule for our portfolio of more than 30 projects,” DOE spokeswoman Aoife McCarthy said in a statement.
Allen Park, Michigan-based VPG received loans under a DOE program that also extended funding to startups Fisker Automotive Inc and Tesla Motors Inc (TSLA.O) as well as established manufacturers Ford Motor Co (F.N) and Nissan Motor Co (7201.T).
VPG fully drew down its $50 million DOE loan with the final payment coming in September 2011. The company built and sold more than 2,000 vehicles and had a backlog of orders.
In April, the DOE seized nearly $5 million from VPG. VPG and the DOE are now seeking a buyer for the company.
Despite the order backlog, the company faced serious constraints on its cash. John Walsh, VPG’s former chief executive, told USA Today that the company laid off about 100 staff in February.
Walsh told the newspaper that the company did not have an adequate dealer network to sell its MV-1 vans. He added that the company stopped operations after the DOE froze its assets.
The news comes at a time of increased doubts about green car startups. For example, Fisker hired bankruptcy advisers and is seeking a buyer as it struggles to repay nearly $200 million in DOE loans. The department took $21 million from Fisker on April 11.
One exception is Tesla, which is backed by a $465 million DOE loan. The company is expected to report its first-ever quarterly profit later on Wednesday.
A number listed online for VPG’s media contact was disconnected. Calls to the company’s main line during normal business hours were greeted with an after-hours message.
Editing by Matthew Lewis