By Timothy Cama - 04/02/14 03:31 PM EDT
The Department of Energy (DOE) is revamping the Advanced Technology Vehicles Manufacturing (ATVM) loans program to be more responsive to companies that apply for loans and to also include vehicle component manufacturers in the program.
The program, launched in 2008, has been the subject of criticism after two automakers that received loans flopped, causing DOE to lose significant parts of their investments. ATVM seeks to encourage fuel-efficient and alternatively fueled vehicle production through loans, loan guarantees and commitments.
“The U.S. auto industry has evolved since the ATVM 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 Wednesday at a Motor Equipment Manufacturers Association meeting, according to DOE.
Republicans have criticized ATVM and similar DOE programs, saying they invest in unsuccessful businesses. They’ve pointed to high-profile failures of companies that have received DOE loans, such as Fisker Automotive. The company planned to build long-range electric vehicles and received a $529 million commitment from DOE, of which Fisker used $192 million. But Fisker declared bankruptcy last year and DOE was able to recover only $53 million of the loan.
Rep. Paul Ryan (R-Wis.), unveiled a proposed budget Tuesday that would cut DOE's loan programs, including ATVM.
Earlier Wednesday, Moniz defended the loan programs while speaking with reporters after a Capitol Hill hearing on his agency’s budget. The vast majority of companies receiving loans have been successful such as Tesla Motors Inc. and Ford Motor Co., DOE said.
“We’ve taken the position consistently … that the program, as a portfolio, has done extremely well. It’s done what it’s supposed to do,” he said. “Maybe I’m worried that the arguments will change, that we’re not taking enough risk.”
DOE records show that the total losses on its portfolio of loans are less than 2 percent.
A $50 million loan to Vehicle Production Group was also put in jeopardy last year after that company went bankrupt. DOE put the loan up for auction and sold it for $3 million.
DOE still has more than $16 billion left of the $25 billion originally set aside for the program.
The program changes announced Wednesday are centered on three goals: clarify that companies making components such as tires and engines are eligible for loans, improve responsiveness to applicants and speed the application process.