Tomorrow’s Cars, Funded Today: DOE Re-energizes the ATVM Loan Program

April 2, 2014 | 3:48 pm
Josh Goldman
Former Contributor

Department of Energy Secretary Ernie Moniz announced today that the DOE is making key improvements to the Advanced Technology Vehicle Manufacturing (ATVM) Loan Program. This is good news for a program that has made some important contributions to developing fuel saving vehicle technology but needs to continue funding qualified applicants to help advance the efficiency of our cars and trucks even further.

What is the ATVM?

The ATVM Loan Program is a $25 billion direct loan program Congress funded in 2008 to help automakers develop the technology needed to boost vehicle fuel efficiency and performance. Think stop-start technology, lighter but stronger vehicle frames, higher compression engines, and batteries for electric vehicles.

Recipients under the loan program have included several major automakers that have used these loans to improve the vehicles they produce. Ford, for example, received $5.9 billion to upgrade factories across five states to produce more fuel-efficient models, and Nissan is using a $1.4 billion loan to construct one of the largest advanced battery manufacturing plants in the United States – capable of producing 200,000 batteries each year.

These companies have been paying the DOE back on time, and Tesla even repaid the entire balance on a $465 million loan nine years earlier than originally required.

Why does the ATVM need to be re-energized?

Despite the initial success of the ATVM program, the program has experienced some challenges. Companies who applied or received loans defaulted on their commitments or pulled applications, and the application process and relatively restrictive applicant requirements have dissuaded other companies from submitting new applications. As a result, the remaining money in the ATVM program has largely remained dormant since 2011.

This has led some legislators to propose cutting some or all of the funding for the program. House Budget Committee Chairman Paul Ryan’s recent spending proposal would zero out this program, for example. But the need to continue developing technology that increases the fuel economy of vehicles persists and this program has already demonstrated success, so it is more important than ever to make smart investments in innovation through the ATVM program. The refinements to the program announced by DOE will help ensure more advanced technology projects succeed.

A smart path forward for the ATVM

This morning DOE outlined several steps they are taking to improve the program, including an important clarification that a broad range of automotive component technologies are loan eligible. Expanding the program to include a wider range of car parts is a smart move, as it will enable companies who produce these components — everything from starter motors and air conditioning units to electric vehicle battery packs and ignition systems — to focus on developing key technologies that will improve the fuel efficiency of cars rolling off the production line.

In addition, DOE is addressing concerns over the application process by launching an online application portal and will begin offering pre-application consultations with potential applicants to promote an early exchange of information about the program and loan terms. All of these improvements should ensure strong participation in the program and a valuable return on investment for all of us.

Now that these changes are in place, more companies should be able to take advantage of this program that is helping develop the vehicles we need to Half the Oil – our realistic plan to cut the nation’s oil consumption in half in twenty years.