V-Vehicle turned down for $321 million bid in DOE loans

Start-up automaker V-Vehicle Co. received news Wednesday that its bid for $321.1 million in federal loans was denied. The loans were considered crucial to getting the company on its feet.
The San Diego-based company, which to date has released little more than a series of teaser images and a short video, has hopes of building high-mileage, environmentally friendly vehicles for the U.S. market in an idled GM plant in Monroe, LA.

A few weeks ago, we passed on a story we picked up from NOLA.com about the company missing a key deadline to qualify for $87 million in state incentives because it did not get approved for a federally backed loan in time.

Officials had said the loan was vital to the company, which has raised $86.5 million in private investment from heavyweights like T. Boone Pickens, Al Gore and Kleiner, Perkins Caufield and Byers. V-Vehicle CEO Frank Varasano has refused to say what the company would do if the loans were rejected. On Wednesday, the company said its board would "assess the situation, evaluate funding and strategic alternatives and develop its plan for moving forward."

Varasano said the company will repay the state $6.2 million in incentives already issued. Voters in Ouachita Parish also approved a property tax increase to fund $12.5 million of a $15 million local incentive for V-Vehicle, which will be canceled.

Louisiana Governor Bobby Jindal said the Energy Department decision was "disappointing and surprising news," but went on to say the state would work with V-Vehicle on other options for completing the project. The residents of Monroe, LA may be the hardest hit if V-Vehicles flops. The company planned to hire 1400 workers at the plant.

Monroe Mayor James Mayo said the Energy Department's decision was "a huge surprise for us. And a blow." But, like Gov. Jindal, Mayor Mayo hasn't given up hope. "We know that this is a huge project and we're not ready to step away from it at this point. It's still cloudy for us and important for us to see what V-Vehicle's options are. Once we know that we can make our determination," Mayo said.