Denied: DOE Loan for Carbon Motors

Upstart pursuit vehicle manufacturer must do without federal backing.

Pure Justice Tour

Houston police officers check out a Carbon Motors E7 prototype as part of the company's "Pure Justice" tour. The fledgling automaker has taken its pursuit vehicle to police departments across the country and says that is has received more than 20,000 reservations.

Carbon Motors, the Indiana-based security technology company and upstart automaker, has learned that the U.S. Department of Energy has denied its request for a direct loan under the Advanced Technology Vehicle Manufacturing (ATVM) program. That $310 million loan, had it been approved, would have helped the company receive the funding it needs to produce its E7 law enforcement pursuit vehicle. That sedan, powered by a 3.0-liter turbodiesel engine mated to an 8-speed automatic transmission, is being developed from the ground up strictly for law enforcement personnel. The company has won support from police and security departments across the country for a vehicle that they say is better suited to serve police than the current offerings from General Motors, Ford and Chrysler.

CEO Statement

Upon receiving notification that its loan application would not be considered, the company updated its website and issued a statement denouncing the DOE’s decision. Said William Santana Li, chairman and chief executive officer, Carbon Motors Corporation, “We are outraged by the actions of the DOE and it is clear that this was a political decision in a highly-charged, election year environment. Since Solyndra became politicized last fall, the DOE has failed to make any other loans under the ATVM program, has pulled back one loan that it previously committed and, as of this month, the DOE has pushed aside the three remaining viable loans under active consideration. Each of these applicants has been caught for several years in a costly and extensive DOE due diligence process. Carbon Motors simply appears to be the last victim of this political gamesmanship. In failing to deploy the tax dollars that Congress allocated for the creation of advanced technology manufacturing jobs in the U.S., the DOE ATVM program represents a glaring failure of the Obama Administration to create jobs that are clearly within its power to create.”

Li noted that a series of applications from other automotive companies have been sat upon by the DOE including ones submitted by Chrysler and General Motors as well as by Aptera and Next Autoworks. Aptera was developing a three-wheel electric car, but the company went out of business following the denial of its loan application. Next Autoworks has had two applications denied by the DOE and has had to close its San Diego headquarters, consolidating its operation to its Detroit technical center. Neither the GM nor the Chrysler loan denials have affected these established automakers to the extent that it has the others, but the related jobs that would have been created following DOE loan approval have been lost.

DOE Engagement

Carbon’s CEO also noted that his company spent 30 months engaging the DOE, by responding to every request made, some of which he described as “unnatural.” Li insists that the DOE gave no indication of problems with its application and that the department had assured him that its request was a top priority. He called the recent spate of application denials a “political decision,” one designed to deflect attention of the ATVM loan program and of DOE officials specifically. The recent failings of several high profile companies including Solyndra has been seized upon by President Obama’s Republican counterparts, an issue that is likely to dog the president as he seeks a second term this November.

Carbon Motors claims that it has 20,000 orders in hand for its sedan. The company says that it will create 1,550 direct jobs for its Connersville, Indiana, manufacturing plant with as many as 10,000 indirect jobs created across the United States. Li claims that the E7 can offer “dramatic savings” for U.S. taxpayers and local governments, pegging that amount at $10 billion. Carbon says that its E7 sedan offers fuel savings of up to 40 percent over current law enforcement fleets. Both its engine and the 8-speed transmission would be sourced from BMW.

Political Support

The company is quick to note that it has received “strong bipartisan support” for its business plan and also secured $200 million of matching funds from private, local and state sources. Without DOE backing, those funds are in jeopardy.

Li also reminded everyone that the AVTM program began under the Bush administration and was continued under the Obama administration. “Our plan cuts across party lines and would have a positive impact on every highway, every street, every city, town, airport, road, port and congressional district. We remain honored to have had received so much support from leaders of all political stripes from around the country,” said Li. Hehas vowed to continue to fight on behalf of his company, promising to follow through with its production plans. However, private funding has been hard to get and without some sort of federal financing, its plans will most likely remain on hold.

Photo: Carbon Motors Corporation

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