Carbon Motors, maker of the purpose-built E7 police car, won't receive the $310 million in U.S. Department of Energy (DOE) loans under the Advanced Technology Vehicle Manufacturing (ATVM) program that it applied for almost three years ago, and said that it's a victim of politics.

"We are outraged by the actions of the DOE and it is clear that this was a political decision in a highly-charged, election year environment," Carbon Motors William Santana Li said in a statement. The company added that it was "actively examining its strategic and financing alternatives."

Carbon Motors says its vehicles will save government entities money because they get better fuel economy and they're purpose-built, meaning that factory vehicles don't need to be retrofitted. Carbon Motors has said its diesel-powered cars may cut law-enforcement fuel use and greenhouse-gas emissions by as much as 40 percent, and that building such cars may create as many as 10,000 jobs. The car was to feature a BMW 3.0-liter turbodiesel engine.

The company says it's received about $200 million worth of financial commitments from private and public sources and has taken orders from more than 500 law-enforcement agencies for more than 20,000 cars.

Last December, the company sent an open letter urging the Obama Administration to push the DOE to approve the loan.

The federal loan process has vexed other automotive companies. Bright Automotive, which was to make extended-range plug-in utility vehicles, publicly pleaded with the government to process its application for a $400 million loan in January. Last month, that company went out of business.

Meanwhile, Fisker Automotive, maker of the extended-range plug-in sports sedan Karma, has been fielding questions about its future after the company in early February laid off workers. Fisker has received less than $200 million of the $529 million loan it was slated to get from the DOE.
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Carbon Motors Announces That ATVM Loan Caught in DOE Political Crossfire

States Decision Not to Proceed with ATVM Loan is a Failure of Leadership

Company Exploring Strategic and Financing Alternatives

CONNERSVILLE, Ind.--(BUSINESS WIRE)--Today Carbon Motors Corporation, a homeland security technology company, announced that the U.S. Department of Energy (DOE) has indicated that it will not proceed with Carbon's $310 million application for a direct loan under the Advanced Technology Vehicle Manufacturing (ATVM) program. The ATVM program was established during the Bush administration and continued under the Obama administration.

"Similar to the experiences of other applicants, we spent over 30 months responding to every request made of us by the DOE – many of which were at best challenging and at worst, unnatural"
"We are outraged by the actions of the DOE and it is clear that this was a political decision in a highly-charged, election year environment. Since Solyndra became politicized last fall, the DOE has failed to make any other loans under the ATVM program, has pulled back one loan that it previously committed and, as of this month, the DOE has pushed aside the three remaining viable loans under active consideration," said William Santana Li, chairman and chief executive officer, Carbon Motors Corporation. "Each of these applicants has been caught for several years in a costly and extensive DOE due diligence process. Carbon Motors simply appears to be the last victim of this political gamesmanship. In failing to deploy the tax dollars that Congress allocated for the creation of advanced technology manufacturing jobs in the U.S., the DOE ATVM program represents a glaring failure of the Obama Administration to create jobs that are clearly within its power to create," commented Li.

General Motors, Chrysler, Next Auto, Aptera, Bright Automotive and Carbon Motors all suffered through the horrendous DOE process that ended in nothing but a vote against the American worker. It clearly indicates an irrational pattern of rejecting or forcing withdrawals of viable applications of all sizes, both from established companies and promising manufacturing start-ups, according to Li.

"Similar to the experiences of other applicants, we spent over 30 months responding to every request made of us by the DOE – many of which were at best challenging and at worst, unnatural," said Li. "During the past year we were in almost daily contact with the DOE staff and were neither advised that our application was coming up short in any way, nor told that there was anything we would need to do in order to finalize the loan that we did not satisfy. On the contrary, up until we were told the DOE would no longer work on our application, we had been assured that it was a top priority for the DOE and encouraged to continue with the multi-million dollar due diligence and negotiation process. Our experience, when viewed in light of the situation with other applicants, makes it hard to conclude that this action is anything other than a political decision to avoid further scrutiny of the ATVM loan program and of DOE officials," described Li.

The Company noted that in recent months the DOE had gone so far as to send members of its loan monitoring team to meet with Carbon Motors in Indiana, and then subsequently requested a follow-up meeting in Washington DC. The loan monitoring team's role is to monitor DOE loans and work with borrowers after the loan has closed. These professionals do not play a material role in the process until a loan is finalized, which supported the Company's view that the DOE had not identified any material issues with the Carbon business plan that would impede the approval of the loan. In addition, in recent months the DOE staff held several meetings with Carbon's key partners, suppliers, investors and state and local officials and in each case, these parties were left with the impression that a positive decision on the loan was imminent. The Company expected the DOE to negotiate in good faith and, after several years of positive assurances, advise the Company if there were any real substantive issues with the plan that would need to be addressed in order to close the loan. The Company was not given any indication of any substantive issues and instead feels blindsided by government officials that simply failed to exhibit any real leadership in the face of typical election year political mudslinging.

Carbon Motors is developing the world's first and only purpose-built law enforcement patrol vehicle, amid strong interest in its breakthrough "E7" product from law enforcement both domestic and foreign. The Company has received over 20,000 reservations for the "E7" vehicle from over 500 law enforcement agencies spread across all 50 U.S. states, in addition to interest in the product for export received from over 35 foreign law enforcement jurisdictions.

As a truly purpose-built product, the E7 represents a substantial innovative step over the retail passenger vehicles that have historically been retrofitted in the aftermarket, with great improvements in areas such as occupant safety, operating cost, mission effectiveness and environmental impact, to mention just a few. "The E7 has been designed to meet all Federal Motor Vehicle Safety Standards with all law enforcement equipment installed, will increase fuel efficiency by up to 40% over the gas-guzzlers used today and, importantly, will satisfy substantially all requirements of the law enforcement mission," said Li.

The Company's product strategy includes a state-of-the-art fuel-efficient clean diesel engine mated to an 8-speed transmission, and has been supported by over 50 world-class development partners and suppliers – many of whom have had their businesses materially impacted by this failure of leadership by the DOE, according to Li. The ATVM loan, together with the equity and other funding dedicated to the project was to be used to complete the development work on the vehicle in the U.S., as well as the tooling and facility costs necessary to produce the E7.

The Company's plan submitted to the DOE included the creation of over 1,550 direct jobs in Connersville, Indiana, one of the areas hardest hit by the prevailing economic malaise, and approximately 10,000 total direct and indirect jobs throughout the country. "Bureaucrats in Washington may view inaction as the safest bet for them personally, but those who are without jobs today in Connersville and facing a very uncertain future have a very different view. Sadly, many of the people who are now in desperate need of a job in our country's heartland had contributed their hard earned tax dollars to the very fund that the DOE now appears unwilling to distribute to qualified candidates," said Li. The Company noted that the ATVM legislation passed by Congress and the Bush Administration included a loan loss assumption of 30% on the entire portfolio, which is reflective of the fact that there is always some inherent risk in funding a business of any size and new jobs will not be created in a risk-free environment – that is the essence of "Advanced Technology" reflected in the name of the program.

"Although the DOE's new found focus on protecting taxpayer interest may be a good talking point for the media, in this particular case, it fails to ring true. The highly efficient Carbon E7 vehicle would have had dramatic savings for the U.S. taxpayer and every city, county and state struggling with budget deficits. The DOE's thoughtless decision just cost the U.S. taxpayer over $10 billion dollars of potential savings," noted Li.

The Company sourced approximately $200 million of matching funds from a variety of private and state and local government sources, which, together with the ATVM loan, would put into effect one of the Company's stated goals of creating a true public-private partnership. "The truth is, government funds are already being used to pay for law enforcement vehicle substitutes – many of which function very effectively as retail passenger cars and none of which function well for the unique law enforcement mission," stated Stacy Dean Stephens, co-founder of Carbon Motors Corporation and a former law enforcement officer. "It is a basic role of government to protect its citizens. The Carbon ATVM loan (which would have been paid back with interest) would simply have ensured that the taxpayers were getting their money's worth as law enforcement end users would benefit from using safe and efficient products that actually work well for their mission," Stephens said.

The decision is made even more puzzling when viewed in light of two of President Obama's Executive Orders: one calling for a 30. The merits of the loan application were detailed in a letter to the President's Cabinet on December 15, 2011 (click here for letter).

Carbon Motors has received substantial bipartisan political support of its business plan and mission to support the nearly 1 million law enforcement first responders in the U.S. "Our plan cuts across party lines and would have a positive impact on every highway, every street, every city, town, airport, road, port and congressional district. We remain honored to have had received so much support from leaders of all political stripes from around the country," said Li.

The Company is actively examining its strategic and financing alternatives in support of its goal to provide law enforcement first responders with a purpose-built tool suitable for their critical mission.

"Our country was not built by those who stood on the sidelines or by those who hid behind political convenience or by those too scared to lead. Our country was built by relentless entrepreneurs that despite the odds, despite the severity of the challenge, despite the roadblocks and despite the naysayers, rose to the occasion, led where there was no leader, and through innovation turned the impossible into the possible – no matter how long it took. We will continue the fight. We at Carbon Motors choose this path not because it is easy, but because it is hard, because it is just, because it is honorable and because we are Americans," exclaimed Li.

About Carbon Motors Corporation

Carbon Motors Corporation is a bold homeland security technology company on a critical mission to design, develop, manufacture, distribute, service, and recycle, the world's first and only portfolio of purpose-built law enforcement patrol vehicles. Learn more at www.carbonmotors.com.

Contacts

Carbon Motors Corporation
Stacy Dean Stephens, 765-207-4044 ext. 718


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  • 79 Comments
      jamiescale
      • 2 Years Ago
      I don't get it... Hey Carbon: go get funding from venture firms and build your company the "old fashioned" way. Why you feel you're entitled to Federal money when there are plenty of other car companies that are currently making police cruisers is beyond me. If this was a new, emerging industry with no clear leaders and a demonstrable value in what you do I'd get the need for special treatment....but this is an established market w/ big, proven players in place and no real need for a new upstart so suck it.
        • 2 Years Ago
        @jamiescale
        [blocked]
      Lou
      • 2 Years Ago
      "Outraged" that the federal government didn't gift you $310M. That seems a bit ridiculous. Yes, other, less worthy companies may have gotten money, but there is no entitlement to it.
        Ed
        • 2 Years Ago
        @Lou
        I agree, but it's fair to point out that it's a loan. It is not quite a gift, although if the company goes bust it obviously will not be repaid.
      David S.
      • 2 Years Ago
      I honestly think the car itself is a great idea and deserves a second look, but any for-profit company that bases its entire business model on taxpayer contributions--and then cries like a spoiled child when they don't come through--doesn't deserve to stay afloat.
        David H
        • 2 Years Ago
        @David S.
        Exactly!!!!
        action3500
        • 2 Years Ago
        @David S.
        Are you in that much of a denial? You're saying that companies that focus on building products FOR GOVERNMENT (Policing people is governmental job btw) should look into private sector first? You have any idea how much it costs to build F22 fighter? You think those projects would lift off the ground without MEGA injection from gov't? PS We know how it went: Big three execs: we're about to loose some revenue to a new start up, time to give a few phone calls to Washington . . . case closed.
          jtav2002
          • 2 Years Ago
          @action3500
          ORRR it really went like this... police department fleet buyer: "well, we have the Taurus, Caprice, and Charger. They're going to be cheaper to buy and maintain. We could also go with a new car, it's untested, and it's going to cost a lot more to buy and maintain. I think we should go with the cheaper more reliable route." Leave the political crap out of this. Why would they give money to something like this when NO ONE has really committed to even buying it? Especially when they have given bad loans in the past and don't want to catch heat for it again.
      Randy
      • 2 Years Ago
      I love this car but I think the Ford Taurus and it's dealer / mechanic network (or GM or Dodges) are far better equipped to keep the police department cars in use and not waiting for fixes or parts! They need to target a major city like LA or NYC and get a contract and focus solely on making it successful as a way of having a proven track record to use as a selling tool to more rural police departments and other cities! Think about it. If you had a new guy say "I can do this anywhere in the world" but is soley relying on your business to exist versus a company that IS everywhere in the world (Ford, GM and Chrysler) who would you pick for your needs? Get 1 Big City! Then branch out!
      Danaon
      • 2 Years Ago
      These vehicles would be priced at $40-50k EACH. That is way too expensive for most departments. A Caprice can be had for under $30k in v6 or v8 guise. Same with the Charger. Plus, you can actually get parts for those, and they don't use BMW engines (less reliable, more complex, parts are MUCH more expensive). It's just a recipe for failure. I guess that's why private equity wasn't interested and they had to try to weasel money out of the government.
        Slizzo
        • 2 Years Ago
        @Danaon
        Under $30k before being converted and adding all the equipment that the departments need (I.E., plexi/steel partition, lights, radios, computers etc..).
          brandon
          • 2 Years Ago
          @Slizzo
          Yeah, people forget that the "conversion" has already been done, so to speak, with carbon. Those things don't need to be added to a carbon car, so it's all relative in the end.
          john92lx91gls
          • 2 Years Ago
          @Slizzo
          On a "purpose-built" police car? That's like selling you a new Kia for $3,900 and then saying "oh, everything you need to use it for it's intended purpose costs about $11,000 extra". Is that really better than saying "the car is $14,900 off the lot" and leave it at that?
      donnieorama
      • 2 Years Ago
      Good for the DOE--Carbon was always a bad investment.
      ken
      • 2 Years Ago
      That's because DOE had a lot of bad loans over the year. $310 million is the approx. total revenue for building all government fleet sedans in North America per year. Carbon Motors simply has no hope in repaying that amount within the next two decades.
        1454
        • 2 Years Ago
        @ken
        You mean the same way that gm and Chrysler will never fully pay back the billions they stole? This is true innovation being flushed down the toilet for politics. The government won't help carbon because they have a vested interest in gm and Chrysler already. And I this is to the tune of millions, in the form of an actual loan. Not billions in a giveaway and stocks.
          jtav2002
          • 2 Years Ago
          @1454
          What's so "innovative" about it, really? It's a diesel powered car(not new). It's purpose built for one application, which means it's not going to be cheap. It won't be cheap to maintain, and parts won't be nearly as readily available. IIRC wasn't this using BMW engines? Hardly cheap either. I have yet to hear any noteworthy departments commit to wanting to use this car on any wide scale. While I have no problem with innovation and moving forward, if it were YOUR money would you invest in this? Not a very wise investment to me. People can complain about the bailouts to GM and Chrysler and that's fine, but at least those are giant companies with mass market appeal globally. This is a risky investment, at best.
          • 2 Years Ago
          @1454
          [blocked]
          brandon
          • 2 Years Ago
          @1454
          @jtav, Have you even bothered to look at the interior design of the car? Nothing else currently in use by the police is like it. It is built specifically for the police. IOW, they can have their guns, etc, on their belt and not have it digging into their sides. Then the computer system is built into to the car, no need to be added. Same with the lights. Yes, the initial investment may cost more, but the final product will be about the same cost after you add in all the necessities that have to be added in order to change a production charger/caprice/taurus into a patrol car. It has nothing to do with the engine being a "BMW" sourced unit. Then there is the fact that it's a diesel with great performance and get's >30 MPG with currently (IIRC) of the above three come close to touching as they are all gas burners. This was/is no more of a risky investment that GM/Chrysler was. Honestly, I would say Boohoo Carbon had the government not forked out billions to keep the other two alive, money that a good portion of it will never get back. But since they just tossed billions gm and Chry's way, then they should help a company that actually has decent designs in the form of a loan.
        CBJMNWLD
        • 2 Years Ago
        @ken
        @1454 So let me get this straight. GM and Chrysler "Stole" Billions? Carbon is "innovation" but the Volt (as most Repubs claim Obama forced GM to make) isn't? Seriously what is it like living in the bubble?
          Danaon
          • 2 Years Ago
          @CBJMNWLD
          Actually the volt is nothing like the pruis. The driveline is completely different. "but there isn't gobs of difference like people here who have never worked on a car claim" is completely hilarious, because only someone who knows literally nothing about the Volt's drivetrain would compare it to a pruis.
          1454
          • 2 Years Ago
          @CBJMNWLD
          The volt is a prius with a bigger battery and builtin plug(slightly oversimplified, but there isn't gobs of difference like people here who have never worked on a car claim). There is nothing remotely innovative about it. Yes, this is/was a purpose built car, but it still had special seats, and builtin computer system that rivaled the LA caprice. Which isn't a normal patrol car. Other than the "dealer network" the big 3 have absolutely nothing going for their cars. This is politics plain and simple. That being said, I don't think the government should be in business of bailouts or loans, but if you're going to give them to one company, then don't be shy about giving them to a company with far better ideas.
          brandon
          • 2 Years Ago
          @CBJMNWLD
          @Danaon, There isn't a ton of difference. The uses a propriatary electric motor to drive the wheel that is and uses it's gas engine mated to a generator to recharge the depleted batteries. The prius uses a a hybrid assist electric motor mounted between the engine and the trans, but can be run full electric to 30+ mph. So really, other than HOW the drive wheels are actually driven, it's not that much different. If anything, the prius Tech cost more to create because it is a whole new revolutionary system for it's time. EV motors have been out and basically all GM did was to throw an "existing design" (gas generator) in with a DC electric motor and call it "innovation." Nothing toyota built existed at it's inception, everything GM built had already been designed. Like I said, those who have never worked on a car would know this. So please, FEEL FREE TO CORRECT ME. I dare you, and I wouldn't make such a bold claim if I didn't know for absolute sure I was right.
      Avinash Machado
      • 2 Years Ago
      Do they really expect to compete with established cars like Charger,Taurus etc?
      Sterling D
      • 2 Years Ago
      Did Carbon Motors really think they could step in and take over the law enforcement vehicle market away from Ford? Ever since they released the police issue Taurus and Explorer Carbon Motors was out of business.
      Fat Milhouse Sean
      • 2 Years Ago
      I think we've subsidized enough auto makers for a while. Existing companies have centuries of experience and there is no need to reinvent the wheel. How about someone produces an alternative power system for existing police cars, eh? A boutique company isn't going to be able to produce enough vehicles anyway.
      hugoboatmd
      • 2 Years Ago
      It's a RENAULT car.?
      Herman
      • 2 Years Ago
      I guess their campaign contribution to Obama didn't go through.
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