Department of Energy Reaches Decision on the V-Vehicle Company's Loan Applications
SAN DIEGO, March 24 /PRNewswire/ -- V-Vehicle Company (VVC), a new American car company, announced today that it has been informed that the Program Office of the U.S. Department of Energy (DOE) will not recommend approval of VVC's two loan applications for $321.1 million from the Advanced Technology Vehicle Manufacturing Loan Program (ATVMLP).
The first loan application was for $79.9 million to complete engineering integration with VVC's 30 U.S. suppliers. The second was for $241.2 million to re-equip and tool an existing manufacturing facility as VVC's first regional assembly plant in Monroe, Louisiana.
VVC filed applications for both loans in March 2009. The DOE conducted an extensive technical, market, financial, regulatory, credit and legal analysis following its determination that the applications were 'substantially complete' in May 2009. The two parties have been negotiating terms and conditions for the loans and finalizing a conditional commitment letter since January 2010.
"We were extremely surprised and disappointed by this decision," said Frank Varasano, founder and chief executive officer of VVC. "Our year-long discussions with the Department of Energy had left us confident and optimistic that the loan applications would be approved."
In June 2009, the State of Louisiana announced a performance-based incentive package of over $133 million of infrastructure, tax credits, tax abatements and customized training as part of a Cooperative Endeavor Agreement (CEA) with VVC in which the company agreed to renovate and expand a former General Motors plant in Monroe. That work began in July 2009 and was targeted for completion in the third quarter 2011. The first production prototype of the V Car is in testing and the projected national on-sale date was planned for the fourth quarter 2011.
VVC would employ over 1,400 people directly when operating at full capacity at the Monroe plant. An economic impact analysis by Louisiana State University (LSU) estimated that this would create an additional 1,800 indirect jobs for a total of 3,200 new jobs in northeast Louisiana. This would make VVC one of the top 30 economic-driver firms in the state with a projected injection of over $19.6 billion in new state economic output through 2024.
"We still believe that VVC is the ideal applicant for the ATVMLP loans," added Varasano. "In addition to having an immediate, positive impact on jobs and the Louisiana economy, the V Car is a high quality, fuel efficient car priced 35-40% below comparably equipped cars, so it would have a greater impact on the environment over the next five years than any electric or hybrid currently on the market or in development today."
The V Car's miles-per-gallon would be among the best of all four-passenger gasoline-powered vehicles sold in the U.S. today. Annual fuel savings would be 300 gallons per year relative to the fleet average and $4/gallon gas prices would mean $1,200 in annual gasoline savings. In addition, the V Car would meet the PZEV emissions standard, the most stringent tailpipe and evaporative emissions standard currently specified by the California Air Resource Board for gasoline-powered vehicles, which results in 71% improvement in NOx emissions. The V Car would save eight billion gallons of gas and 160 billion pounds of CO2 in the 10 years after launch.
Varasano reaffirmed the company's commitment to reimburse the state approximately $6.2 million of taxpayer funds by April 1, 2010 as required by the CEA. "We want to thank the people of Louisiana and, in particular, the professionals at the Louisiana Economic Development agency (LED)," he said. "LED was a valuable partner at every stage throughout our negotiations with the DOE." VVC plans to meet with its board to assess the situation, evaluate funding and strategic alternatives and develop its plan for moving forward.
Varasano, a former Oracle Corporation and Booz Allen Hamilton executive, founded VVC in 2006. The company's vehicle design team is led by Tom Matano, who is best known as the "father of the Mazda Miata," which was recently named the "most iconic" car of the past 25 years by BusinessWeek. VVC has successfully closed two rounds of funding totaling over $85 million.
Contact: V Vehicle Company Joseph K. Fisher 961 South 16th Street (917) 744-8434 San Diego, CA 92113 email@example.com
SOURCE V-Vehicle Company