Long shrouded in secrecy, auto startup Next Autoworks, formerly known as V-Vehicle, has withdrawn its application for a $320 million loan from the DOE's Advanced Technology Vehicle Manufacturing (ATVM) program.
According to an article in Louisiana's The News Star, and a company release obtained by Greentech Media, the application was withdrawn after DOE officials informed the automobile startup that its application would not be approved. “Recent defaults of other DOE-funded startups [Solyndra and Beacon Power -ed.] have caused the government to re-evaluate its appetite for loans to early-stage companies,” said Next Autoworks in the release, which went on to state: "Next was advised by the DOE on November 22 that the Company’s loan application would not be approved given political and credit-risk concerns regarding the funding of startup companies."
Greentech Media reported on the firm in 2009. Backed by venture capital firm Kleiner Perkins Caufield and Byers (Kleiner has also invested in luxury hybrid-electric startup Fisker Automotive), the firm had intended to build a factory in Louisiana's Ouachita Parish to make what it called a "high quality, environmentally friendly and fuel-efficient" car at a "very competitive price." The San Diego-based startup is also backed by Texas oil billionaire T. Boone Pickens, who has evangelized for switching the country's vehicles to run on natural gas, as well as Google Ventures and James Davison, owner of the former Guide headlight factory in Louisiana. Investors have put about $100 million in the company. The News Star reports that "the company spent virtually all of its more than $90 million in private capital."
That Guide factory was intended to be converted into an auto assembly plant that would eventually employ 1,400 workers.
The company was founded by Frank Varasano, a former Oracle executive (Ray Lane of KP is a former Oracle CEO). Mazda Miata designer Tom Matano is the design director at the firm. And stepping into the hotseat, Kathleen Ligocki was just named CEO of Next Autoworks in October, replacing interim CEO Ray Lane, who will continue to serve as Chairman of the Board. Ligocki previously served as CEO of Tower Automotive and GS Motors and led global divisions of Ford Motor Company. The former CEO, Varasano, parted with the firm after the DOE rejected an initial ATVM application in 2010.
Just what Next Autoworks is (or was) implementing is unclear. Given the comments made by Lane in 2009, it seems like V-Vehicle's innovations were largely in its design and manufacturing processes. "The thing that excites me the most about V-Vehicle Company is that it is a holistic change," Lane said in a prepared statement. "We're thinking about, from beginning to end, how to reconstruct a car company."
GigaOm reported in June that Louisiana had pledged to furnish up to $67 million in grants under a “mega-fund” for economic development -- on the condition that Next Autoworks win low-cost federal loans requested under the Department of Energy’s ATVM program.
But that mega-fund was in doubt because of Louisiana state fiscal issues -- and with the loss of the state grant and the loss of the DOE loan, it would appear that the future of the firm is in jeopardy. The Louisiana factory is certainly dead.
Senators Mary Landrieu, D-La., and David Vitter, R-La., had pushed the DOE to make the loan.
The future of this startup which had promised to "change the automotive business in the United States" is uncertain. “For the company, Next Autoworks will evaluate strategic alternatives with our board and our stockholders,” said Ligocki, the new CEO, in the official statement.
That term -- "evaluate strategic alternatives" -- rarely bodes well for a company's fate.
Next Autoworks would not expand on the prepared statement and we await a response from Lane of KPCB.
The ATVM Loan Program consists of direct loans to support the development of advanced technology vehicles and associated components in the United States. Here are the loans it has provided, as per the DOE website: