The U.S. Department of Energy (DOE) supports the commercial development of advanced technology vehicles (ATV) and associated components through its Advanced Technology Vehicle Manufacturing (ATVM) Loan Program administered by the agency's Loan Programs Office (LPO). ATVM is a direct loan program established pursuant to Section 136 of the Energy Independence and Security Act of 2007.

Under the ATVM Program, automobile manufacturers or advanced vehicle automobile component manufacturers are eligible to obtain direct loans from DOE for projects that reequip, expand, or establish manufacturing facilities in the United States that produce "ultra efficient vehicles," passenger automobiles, light duty trucks, or associated components that meet DOE's emission and fuel economy standards for "advanced technology vehicles."

To date, DOE has funded five loans under the ATVM program totaling $8.4 billion, approximately one third of its $25 million loan authority. The ATVM Program is not subject to an expiration date, and despite previous Congressional efforts to rescind ATVM's funding, the program and its remaining $16.6 billion in loan authority is being actively promoted for new loans by the DOE and LPO leadership and staff.

ATVM is actively soliciting quality applications. Program officials are vocal in promoting the use of DOE's capital for industry scale-up and improvement projects. For companies seeking to expand materials, component, or manufacturing lines, ATVM offers an attractive opportunity for low-interest capital, less fees than other DOE loan programs, and a precedent for both high-value loans and the program office's willingness to interpret its legislative mandate as broadly as possible (e.g. loans in support of companies beyond established automakers, such as Tesla and Fisker).

In addition to meeting technology and commercial eligibility criteria, each applicant must be determined by DOE to be financially viable without receipt of additional federal funding associated with the proposed project. Specifically, these rigorous terms specify that the principal amount of the loan may not exceed 80 percent of reasonably anticipated total project costs, and the term of the loan may not exceed the lesser of the projected life of the proposed project or 25 years.

With Vehicle Production Group's and Fisker Automotive's loans auctioned off following defaults, the loans from Ford and Nissan in the process of repayment, and Tesla's loan paid back in full nine years ahead of schedule, ATVM has a varied record across its five loan portfolio but a less than 2% default rate by dollar value.   Accordingly, we expect the program to continue to push currently established program priorities, such as strategic and creditworthy partnerships on the part of applicants; advanced vehicle technologies in the consumer vehicle category (under 8,500 pounds) rather than fleet or commercial vehicles; and a strong focus on electric vehicle technology (e.g. advanced lithium battery components, charging infrastructure, and vehicle lightweighting to offset heavy battery systems).

In March 2015, the Department of Energy announced a conditional commitment for a $259 million loan to Alcoa Inc. The conditional commitment is the first issued by the Department under the ATVM loan program since Secretary Moniz announced a number of improvements to the program in 2014, and is the first step toward issuing a final loan to Alcoa. If finalized, the loan would support the company's Alcoa, Tennessee, manufacturing facility, where the company will produce high-strength aluminum for North American automakers to lightweight their vehicles.

Unlike the DOE's Title XVII Loan Guarantee Program, the ATVM Program is not subject to an expiration date, application fees, or excessive diligence and project negotiation fees. Indeed, with ATVM, the DOE covers both the credit subsidy costs and its own counsel fees. While private financing is broadly available and often at attractive, comparable rates to low-interest federal loans, automotive and automotive components; materials for vehicles, engines, batteries, and electronics; and integrated new vehicle technologies remain challenging to finance at a rate comparable to this program. Taken together, these factors make this program the most attractive government financing available.