Bright Automotive gets dimmed, will shut down because of DOE loan program delays

Bright Automotive will shut down after the maker of the extended-range plug-in utility vehicles said the federal government took too long to make good on its planned loans to the Michigan-based company, the Wall Street Journal reports, citing a letter company executive sent to U.S. Energy Secretary Steven Chu yesterday.

Bright Automotive, which applied for about $400 million in loans in 2008, had been told for the past 18 months, that the loan was close to funding, but things just took too long. Bright warned the DOE that time was running short just a week ago, saying "If our ATVM application is not moved forward to the next level by March 2, 2012, our mission ends. Period." Yesterday's letter says, in part:

Last week we received the fourth "near final" Conditional Commitment Letter since September 2010. Each new letter arrived with more onerous terms than the last. The first three were workable for us, but the last was so outlandish that most rational and objective persons would likely conclude that your team was negotiating in bad faith.

(Find the full text of the harshly worded letter after the jump.)

The company, which also received a $5 million equity investment from General Motors, had planned to use an old Hummer plant in Indiana to build its Bright Idea utility van by 2014, the Journal said, but reports of problems have surfaced before.

Bright Chief Operating Officer Mike Donoughe made a public statement late last month saying it was ready to add as many as 2,500 direct and indirect jobs through its vehicle production but needed its loan request to be processed "swiftly." Ford, Nissan and Fisker are among advanced-powertrain vehicle makers that have received loans from the federal government.

"This program is an unmitigated disaster."

Michael Brylawski, who co-founded Bright and was an executive vice president there, told AutoblogGreen that the bigger question is about the ATVM program itself. When the government says it will dump $25 billion into one sector of the economy, that changes things, he sadi. "In theory, this is not a hostile administration [to plug-in cars]," he said, so the disconnect between the expressed promotion on one hand and delays in getting ATVM money out the door on the other is incredible. "[The delay] hasn't only distorted the market, it killed the market," he said. "This program is an unmitigated disaster. There needs to be some real answers coming forth from our community."

Bright planned to make a vehicle that would be able to go about 40 miles on electric power alone before a gas-powered generator kicked in to give the van a range similar to that of the Chevrolet Volt. Bright was founded in 2007 by a consortium of, the Rocky Mountain Institute, the Turner Foundation, Alcoa, and Johnson Controls.

What happens next? Brylawski said that the technology and engineering in the van remains an asset of the company, so "we're trying to get value from that, but Bright Automotive is winding down." The business model and the product still has merit, and the vehicle was really progressing to be something special. The prototype (pictured above) is almost three years old, but because there is a need to protect the intellectual property, Bright can't disclose images of the updated van, but "it was looking awesome," he said. Who knows where it may appear next.

Sebastian Blanco contributed to this report.

Show full PR text
February 28, 2012

Secretary Steven Chu
U.S. Department of Energy
Washington, D.C.

Dear Secretary Chu,

Today Bright Automotive, Inc will withdraw its application for a loan under the ATVM program administered by your department. Bright has not been explicitly rejected by the DOE; rather, we have been forced to say "uncle". As a result, we are winding down our operations.

Last week we received the fourth "near final" Conditional Commitment Letter since September 2010. Each new letter arrived with more onerous terms than the last. The first three were workable for us, but the last was so outlandish that most rational and objective persons would likely conclude that your team was negotiating in bad faith. We hope that as their Secretary, this was not at your urging.

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. It means our product, the Bright IDEA plug-in hybrid electric commercial vehicle, will not provide the lowest total cost of ownership for our commercial and government fleet customers, saving millions of barrels of oil each year. It means turning your back on a bona fide step forward in our national goal to wean America away from our addiction to foreign oil and its implications on national security and our economic strength.

In good faith we entered the ATVM process, approved under President Bush with bi-partisan Congressional approval, in December of 2008. At that time, our application was deemed "substantially complete." As of today, we have been in the "due diligence" process for more than 1175 days. That is a record for which no one can be proud.

We were told by the DOE in August of 2010 that Bright would get the ATVM loan "within weeks, not months" after we formed a strategic partnership with General Motors as the DOE had urged us to do. We lined up and agreed to private capital commitments exceeding $200M – a far greater percentage than previous DOE loan applicants. Finally, we signed definitive agreements with state-of-the-art manufacturer AM General that would have employed more

than 400 union workers in Indiana in a facility that recently laid-off 350 workers. Each time your team asked for another new requirement, we delivered with speed and excellence.

Then, we waited and waited; staying in this process for as long as we could after repeated, yet unmet promises by government bureaucrats. We continued to play by the rules, even as you and your team were changing those rules constantly – seemingly on a whim.

Because of ATVM's distortion of U.S. private equity markets, the only opportunities for 100 percent private equity markets are abroad. We made it clear we were an American company, with American workers developing advanced, deliverable and clean American technology. We unfortunately did not aggressively pursue an alternative funding path in China as early as we would have liked based on our understanding of where we were in the DOE process. I guess we have only ourselves to blame for having faith in the words and promises of our government officials.

The Chairman of a Fortune 10 company told your former deputy, Jonathan Silver, that this program "lacked integrity"; that is, it did not have a consistent process and rules against which private enterprises could rationally evaluate their chances and intelligently allocate time and resources against that process. There can be no greater failing of government than to not have integrity when dealing with its taxpaying citizens.

It does not give us any solace that we are not alone in the debacle of the ATVM process. ATVM has executed under $50 million of transactions since October of 2009. Going back to the creation of the program, only about $8 billion of the approved $25 billion has been invested. In the meantime, countless hours, efforts and millions of dollars have been put forth by a multitude of strong entrepreneurial teams and some of the largest players in the industry to advance your articulated goal of advancing the technical strength and clean energy breakthroughs of the American automotive industry. These collective efforts have been in vain as the program failed to finance both large existing companies and younger emerging ones alike.

Our vehicle would have been critical to meet President Obama's stated goal of one million plug- in electric vehicles on the road in 2015 and his commitment to buy 100 percent alternative fueled vehicles for the Federal Fleet. So, we are not the only ones who will be disappointed.

The ineffectiveness of the DOE to execute its program harms commercial enterprise as it not only interfered with the capital markets; it placed American companies at the whim of approval by a group of bureaucrats. Today at your own ARPA-E conference, Fred Smith, the remarkable leader of FedEx, made the compelling case to reduce our dependence on oil; a product whose price is manipulated by a cartel which has caused the greatest wealth transfer in our history from the pockets of working people and businesses to countries, many of whom are not our allies. And yet, having in hand a tremendous tool for progress in this critically strategic battle -- a tool that drew the country's best to your door -- you failed not only in the deployment of funds from ATVM but in dissipating these efforts against not just false hope, but false words.

For us, this is a particularly sad day for our employees and their families, as well as the employees and families of our partners. We asked our team members on countless occasions to work literally around the clock whenever yet another new DOE requirement came down the pike, so that we could respond swiftly and accurately. And, we always did.


Reuben Munger CEO
Mike Donoughe COO

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