Start-up Bright Automotive will close its doors

Correction: Earlier versions of this article incorrectly said the Obama administration loaned $535 billion to Solyndra. It loaned $535 million. A quote in the story also misstated the savings in gallons of oil that would be realized in creating a fuel saving vehicle. In addition, the story misstated the percent of equity companies who won loans from the DOE were required to contribute. This version has been corrected.

February 28, 2012

An Indiana electric vehicle company that had planned to build energy-efficient fleet trucks announced Tuesday it will close down this week, and it blamed the Obama administration for stringing the company along for three years with promises of a federal loan.

Bright Automotive executives complained in a letter to Energy Secretary Steven Chu Tuesday that the agency has since 2010 vowed repeatedly that the company’s application was “close” and “within weeks” of winning a $450 million federal loan to launch its manufacturing plant for hybrid plug-in fleet trucks.

Bright’s business plan was endorsed by major corporations with large gas-guzzling fleets, such as Comcast, FritoLay and ServiceMaster, and had advance customer orders from Duke Energy and Snap-on Tools.

“The actions – or better said “lack of action” — by your team means hundreds of great manufacturing and technical jobs, union and non-union alike, and thousands of indirect jobs in Indiana and Michigan will not see the light of day,” Bright CEO Reuben Munger wrote to Chu.

The company, which has 60 employees, said it would be unable to make payroll on Friday.

The Department of Energy has said in the past it must study applications and make strict requirements of all applicants to be a careful steward of public dollars.

“We understand that this is a difficult day for Bright Automotive and their workers,” said DOE spokesman Damien LaVera. “Over the last three years, the Department has worked with the company to try to negotiate a deal that supported their business while protecting the taxpayers. In the end, we were not able to come to an agreement on terms that would protect the taxpayers.”

Bright Automotive leaders complained in the letter and in interviews that the Department of Energy’s $25 billion green car loan program was a “debacle” and its actions contradicted the president’s pledge to put 1 million electric vehicles on the road by 2015.

As part of its loan program to promote electric vehicle manufacturing in the U.S., the Department of Energy quickly extended a flurry of initial loans to encourage fuel-efficient and electric vehicle manufacturers in 2009 — $8.5 billion worth to four companies. Most of the money in those four loan deals went to retrofitting Ford assembly lines for fuel-efficient models; the rest went to help Nissan and start-ups Tesla Motors and Fisker Automotive build the electric and hybrid vehicles each proposed.

The program was authorized to loan $25 billion for energy-efficient vehicle manufacturing. But since that first round, it has approved just one more loan of $50 million, to the Vehicle Production Group.

Michael Brylawski, a co-founder of Bright, said DOE officials offered the company four different sets of tentative loan agreements over the three years — but each time increased the requirements the company had to meet. While companies that won earlier loans had to contribute 20 percent of the equity for their business project, the latest DOE offer required Bright to contribute 50 percent.

“We were going to turn a shut-down line at a Hummer facility into a plant that would create a fuel saving vehicle for the 21st century and cut down on the country’s use of 2 million gallons of oil a year,” Brylawski said.

In the wake of the failure of Solyndra, a shuttered solar company the administration loaned $535 million, the Obama White House has become cautious in making major green energy loans. Some energy analysts have criticized the White House for its green car program and its strategy of using billions in stimulus to encourage people to make and buy electric cars.

Fisker, which won a $529 million loan, has faced a series of setbacks, including a two-year delay in producing its first car, the luxury sports model Karma, released late last year. It had to recall several Karmas due to battery problems.

Earlier this month, Fisker announced it would lay off 66 to 70 workers in Delaware and California because it had missed federal milestones and could no longer draw on the Department of Energy’s loan. The company has so far drawn only $193 million and delayed its plans to manufacture a lower-cost Nina model in Delaware, the portion of the loan that was supposed to directly create permanent U.S. manufacturing jobs.

Carol Leonnig covers federal agencies with a focus on government accountability.
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