Since the initiation of Section 136 of the Energy Independence and Security Act of 2007, known as the Advanced Technology Vehicles Manufacturing Loan Program, there has been uncertainty in the industry surrounding the incentive program that offers direct loans to help automakers and suppliers obtain the financing they need to retool older plants and purchase equipment necessary to produce energy-efficient vehicles.
The FY 2009 Continuing Resolution (CR) enacted on September 30, 2008, appropriated $7.5 billion to support a maximum of $25 billion in loans under this program, and much of the industry’s concern centered on understanding the eligibility requirements and knowing how much of the funding might still be available for automakers and suppliers following the first tranche period, which closed December 31, 2008.
According to the Electric Drive Transport Association (EDTA):
“As of December 31, 2008 - the closing date for the first tranche of applications -the (ATVMIP) had received 75 applications from automobile manufacturers and component suppliers; one additional application was received after December 31, 2008. Many of the 75 applications proposed multiple projects. Of the 75 applications, 43 were received between December 29 and 31, 2008. DOE has completed the initial review of 64 of the 75 applications received prior to December 31, 2009, and anticipates completing the review of the remaining 11 applications by January 23, 2009. Altogether, the 75 applications total $38 billion in requested ATVMIP funding.”
Although the U.S. Department of Energy (DOE) began taking applications for ATVMA loans in early December and the first deadline was Dec. 31st, we made our clients aware that the DOE only expected a supplier’s application to be “substantially complete” by that date. We also encouraged them to continue to apply for loans even if they thought they were too late in doing so. Most suppliers in the industry didn’t realize that this was an ongoing, iterative process with many steps between the initial application and the actual closing of the loan.
On March 6 the DOE determined to change the previously announced process to consider and evaluate substantially complete applications for loans under the ATVMIP as and when they are submitted. Further, the DOE may make decisions on such applications and close loans with respect to such applications at any time. Accordingly, applications submitted after December 31, 2008 will be treated in the same manner as applications submitted prior to December 31, 2008.