This post originally appeared on Green Car Reports.
Startup plug-in vehicle maker Bright Automotive announced today that it is closing down.
While General Motors had invested $5 million in the company, Bright had relied on the hope that the U.S. Department of Energy would grant it low-interest loans under the advanced-technology vehicle manufacturing program.
A letter from its CEO and COO to Energy Secretary Steven Chu notes that the Indiana company has waited more than three years for a DoE verdict on applications it submitted in December 2008.
'Unacceptable to us and our investors'
"Last week, we received the fourth 'near final' Conditional Commitment Letter since September 2010," Bright CEO Ruben Munger and COO Mike Donoughe wrote In the letter, which withdraws its loan application.
"Each new letter arrived with more onerous terms than the last."
"The first three were workable for us," wrote Munger and Donoughe, "but the last was so outlandish that the most rational and objective persons would likely conclude that your team was negotiating in bad faith."
The two had written a week earlier to Secretary Chu that the DoE's latest terms were "unacceptable to us and our potential investors."
Earliest terms the easiest
According to a Bright source, over the years the DoE negotiating team would claim that agreement was close, but that "we couldn't get consensus" on the 10-member board that decided on loan applications.
So each new draft contained additional and more onerous requirements.
The DoE first required increasingly detailed agreements with partners--out of which came a $5 million investment by GM Ventures in August 2010, an agreement with AM General for van assembly late last year, and various other signed vendor contracts.
In today's letter, Munger and Donoughe claim that in 2010, the DoE had urged them to link with an established automaker, and promised that if they did so, loans would be approved in "weeks, not months."
Increasing match, loan spending ban
More problematic for the private financiers, the DoE also steadily increased the level of matching funds Bright was required to raise.
For the earliest loan recipients in June 2009--Ford, Nissan, and Tesla--that level was at roughly 20 percent.
But Bright's required match on a $314 million loan application grew from $120 million in late 2010 to $240 million last year, which the company reluctantly agreed to.
But then in the final round this year, it grew again, to $345 million--or more than the total loan Bright had requested.
Perhaps most onerous of all, the DoE newly insisted that every penny of privately invested capital be spent first, before Bright could draw down any of its DoE funding.
There were also fine-grained milestones to be met in design, engineering, even marketing, that would be reviewed quarterly.
False words, false hope?
In the end, Bright never managed to put more than a few prototype vans on the road.
And 1,175 days after its first application, the company could wait no longer.
Bright's executives minced few words in laying out the impact of the DoE's lengthy decision-making process. Their letter says,
The ineffectiveness of the DOE to execute its program harms commercial enterprise as it not only interfered with the capital markets; it placed American companies at the whim of approval by a group of bureaucrats.
Today at your own ARPA-E conference, Fred Smith, the remarkable leader of FedEx, made the compelling case to reduce our dependence on oil; a product whose price is manipulated by a cartel which has caused the greatest wealth transfer in our history from the pockets of working people and businesses to countries, many of whom are not our allies.
And yet, having in hand a tremendous tool for progress in this critically strategic battle -- a tool that drew the country?s best to your door -- you failed not only in the deployment of funds from ATVM but in dissipating these efforts against not just false hope, but false words.
Term sheet from China
"Because of [the loan program]'s distortion of U.S. private equity markets, the only opportunities for 100 percent private equity markets are abroad," the letter says.
The two executives take the blame for not pursuing funding from China, saying that Bright "made it clear we were an American company."
According to the Bright insider, "we had a term sheet with a Chinese investor."
And, he said ruefully, "had we known in 2010 what we know now, we'd be a Chinese company today"--and still in business.
Plug-in delivery van
Bright was founded in January 2008 to develop and build a plug-in hybrid light commercial delivery van, a vehicle type that covers more miles than passenger cars and whose owners are willing to spend more up front for the promise of savings over the lifetime of the vehicle.
Its design, the Bright Idea van, offered a payload of up to 2,000 pounds and gas mileage in mixed use of up to 100 miles per gallon.
It was to run up to 40 miles on electricity from its 13 kilowatt-hour lithium-ion battery pack that powered by a rear-wheel drive electric motor.
Then, its four-cylinder GM engine and transmission would take over, assisted by a smaller electric motor, to power the front wheels.
In essence, the Bright Idea was to be the world?s first plug-in through-the-road hybrid delivery truck.?
We drove the Idea prototype back in October 2009, when its extended-range engine was a 2.0-liter gasoline engine from a Dodge Caliber.?
We found it performed -- and behaved -- much like a conventional hybrid, with the same lag on acceleration and disconnect between engine speed and road speed you?d find on any conventional hybrid car.?
The collective employment history of Bright?s founding engineering team included engineers from teams working on the GM EV1, Ford Fusion, BMW, Mercedes-Benz, and even Segway.
Source: http://www.businessinsider.com/startup-bright-automotive-shuts-down-slams-doe-loan-process-2012-2
personhood herman cain press conference joe frazier dead joe frazier dead topamax lexapro trazodone
In his annual letter to shareholders of Berkshire Hathaway, Warren Buffett, while noting the per share book value of their Class A and Class B stock gained 4.6 percent in 2011, says he jumped the gun on the housing recovery. As Business Insider tells MHProNews.com, ?We have five businesses whose results are significantly influenced by housing activity. The connection is direct at Clayton Homes, which is the largest producer of (manufactured) homes in the country, accounting for about 7% of those constructed during 2011,? says Buffett. He says a market adviser would tell him to dump the stocks relating to the construction industry but that is not his style. Problem companies just require more managerial time than winners. He says, ??.If the business will likely be a cash drain over the longer term, or if labor strife is endemic ? we will take prompt and decisive action. Such a situation has happened only a couple of times in our 47-year history, and none of the businesses we now own is in straits requiring us to consider disposing of it.? Berkshire Hathaway owns Acme Brick, Shaw Carpets, Johns Manville (insulation), and MiTek (roofing connector plates). Buffett says in 2011 the five housing-related companies generated pre-tax profits of $513 million, similar to the previous year, but well below the $1.8 billion in 2006.
60-Second Science |
Evolution
