US Department of Energy rejects Carbon Motors’ $310M loan request

Article by Anita Panait, on March 9, 2012

Carbon Motors revealed that the $310 million loan application it submitted to the U.S. Department of Energy has not been approved. This loan was part of the federal agency’s Advanced Technology Vehicle Manufacturing program whose goal is the manufacture of the E7, a purpose-built and fuel-efficient police vehicle. Had the loan been approved, the company would have spent it on setting up a factory that has been vacated recently. Said facility was to be put up in Connersville, Indiana, which in turn would have become the world’s police car capital.

In addition, it would have brought around 1,500 jobs to a city that is already facing economic issues. Should the plan have pushed through and the E7 manufactured, it would have been the first police car to have been designed from scratch. This is because typical police vehicles are often civilian models that have been converted. Powering E7 would have been a diesel engine capable of delivering an output of 300 hp with peak torque of 420 lb.-ft. According to the company, the engine would have allowed the E7 to reach a maximum speed of 155 mph with acceleration from 0 to 60 mph attained in 6.5 seconds.

Fuel economy meanwhile is estimated to be between 28 mpg and 30 mpg. As a possible police car, the E7 would remain to be safe for the occupants while fitted with police equipment. If ever a crash occurs, radios and computers inside a vehicle generally become projectiles. As such for the E7, all of the communication equipment has been integrated to the model’s dashboard. Its seats have been designed in a way that police officers can sit comfortably, even if they are sporting utility belts. To allow for aerodynamics, almost all equipment has been incorporated to the bodywork. These include, among others, the lights, biohazard sensors, and plate-recognition cameras.

Commenting on the disapproval of the loan, Carbon Motors Chairman and CEO Santana Li shared that the company is outraged at the decision and there was a possibility that politics was involved, considering that this is an election year. However, he added that the denial of the loan did not mean the company would go bankrupt. Li continued by saying that the company is more than willing to continue this fight. He further said that the company knew from the start that the path would be difficult but still decided to pursue it as it was honorable. It was the best decision as we are all Americans, he shared. Though there is no plan B at the moment, Li revealed, the company is looking into other financial alternatives.

The DOE, through its spokesperson Damien LaVera, released a statement arguing that no politics was involved in the decision to deny the loan. For at least two and a half years, LaVera said, the DOE has been discussing with Carbon Motors to come up with a deal that will not only help their business but to also ensure that taxpayers are protected. Sadly, he continued, an agreement could not be reached as it relates to the protection of the taxpayers. He said further that the DOE however remains steadfast in the belief that Carbon Motors is truly an innovative company that has presented an interesting project. The Department therefore wishes them luck, LaVera concluded. This reaction from the DOE is not entirely unexpected as many startup car companies are typically considered high risk investments.

Government agencies, or even private investors, would not want to put cash on what could be another DeLorean. According to CEO Li, ever since Solyndra failed, the DOE had been hesitant to approve loans. President Obama had earlier promised to enhance the efficiency of the federal fleet by as much as 30% and the E7 could have made this possible. Had the loan been approved, Carbon Motors would have used it to completely develop the E7, which includes crash-testing procedures. It would also be used to pay for any of the manufacturing costs incurred. Li revealed that Carbon Motors had managed to raise a total of $200 million from different private sources. Currently, the company has received reservations for the E7 amounting to 20,176 units.

Topics: united states

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