As Loan Funds Shrink, Green-Car Startups Scramble

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What's Aptera's backup plan? Marketing chief Marques McCammon recently told former Tesla Motors vice-president Darryl Siry that if DOE funds don't come through, Aptera's alternate route to financing production is "still private money." ATVM funds would allow the company to turn "into a big boy much faster than if you had only organic growth," he said, adding that, "We have a sizable amount circled and we intend to get the rest." Still, as this week's shuttering of battery startup Imara demonstrated, it's no easy task to raise private capital when still-pending government funds could alter the competitive landscape.

Bright eSolutions' timely Army deal

Bright Automotive CEO John Waters described a similar strategy to us earlier this year, saying that the company had either to secure DOE loans or raise capital from private equity markets by the end of May in order to reach its target of producing fleet vehicles in the fourth quarter of 2012. Yet in June, Waters told us that Bright was still awaiting a final answer from the DOE—and still in the process of raising private equity. No word has since been heard on either front.

Bright has pursued other sources of revenue. It launched a consulting business called Bright eSolutions in October, snagging a $1.4 million demo project, reportedly two years in the making, with the U.S. Army's department of Tank-automotive and Armaments Command (TACOM) to test Bright's plug-in hybrid vehicles for noncombat situations.

V-Vehicle, meanwhile, has raised $100 million from high-profile investors, including T. Boone Pickens and Kleiner Perkins, and an $82 million grant package through federal, state, and local government channels. The grant package comes with strings attached: V-Vehicle has to meet it with $350 million by Mar. 1 to trigger most of the incentives. The company is counting on that DOE loan to cover more than 70% of the obligation.

sell something soon, build core line

In October, the 3-year-old startup said it expected an answer on the loan by the end of November. Last week, the News Star of Monroe, La., quoted Horst Metz, vice-president of assembly operations for V-Vehicle, as saying: "[W]e remain very confident that we'll be approved for the loan." He added that "[W]e haven't been given any timetable on when that might be." DOE spokesperson Ebony Meeks noted that the agency has not scheduled any new ATVM loan announcements.

As Peter Wagner, a venture capitalist with Accel Partners, and Dan Squiller, CEO of battery startup PowerGenix, told me (GigaOM Pro, subscription required): If you're trying to break into a capital-intensive business, an entrepreneur who finds "something he can sell right now," and strengthens that core business, can then position a startup to produce the bigger-ticket item as the market grows. (They were talking specifically about the energy storage market, but the advice would seem to apply to advanced vehicles.)

The DOE brought former venture capitalist Jonathan Silver on board as executive director of the ATVM program (and also the green-car loan guarantee program), with the idea that he would "strengthen and streamline" the agency's operations. As Silver heads into his second month at the post, the clock is ticking on the streamlining effort. It also ticks for loan applicants as they ready plans to enable them to hit the ground running—whether the DOE gives them a green light or a red one.

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