A new company called XP Technology is trying to sue the Energy Department over its loan guarantee program, and the suit contains some serious allegations, as reported by Fox News:
XP has filed four applications with the Energy Department for loans through its Advanced Technology Vehicles Manufacturing (ATVM) program, two in the amounts of $25 million and $45 million that have been denied. Two other applications are still pending. The company says it was given a $1 million grant from a previous Energy Department program to help develop a hydrogen storage system which it has incorporated into its vehicle.
To date, the $25 billion ATVM program has approved just four loan guarantees for Ford, Nissan, Tesla and Fisker, totaling approximately $8.5 billion. XP alleges those awards were the product of a poorly documented process rife with political cronyism and manipulation, and not based purely on merit.
XP manager Scott Douglas Redmond says his company has several witnesses and ¬†more than 5,000 documents to back up its claims that it will reveal during a trial, if one is granted. But he also cites several published reports critical of the administration of the Energy Department‚??s various loan programs. These include a U.S.¬†House Oversight and Government Reform Committee¬†report issued on Oct. 31, on the Section 1705 program that granted a $535 million loan guarantee to now-bankrupt solar energy company Solyndra, which concluded that ‚??Department of Energy employees felt political pressure from sources as high as the president, vice president, [Energy] Secretary Chu, and senior White House officials.‚?Ě
(Emphasis mine.) ¬†XP claims that big players are using their connections to starve little companies out of these much-needed grants. ¬†The plucky San Francisco-based startup is about as little as they come; they’ve only got seven employees, and unsuccessfully tried to file their suit in federal court without a lawyer. ¬†(They plan to try again¬†with¬†a lawyer.)
The technology XP is developing involves electric cars with foam bodies mounted on rigid frames, which would cause them to weigh less than half of existing electric cars. ¬†These cars would have replaceable battery packs, making it more convenient to recharge them. ¬†It sounds weird, but existing efforts to build what amount to electric-hybrid versions of traditional compact cars, at fantastic cost and dubious reliability, haven’t been going over terribly well. ¬†Maybe it’s time for the electric-car crowd to admit that the only way to make this technology work, barring some tremendous new futuristic technology, is to settle for jumped-up golf carts. ¬†If they’re cheap and convenient to recharge, they just might sell.
The rest of us shouldn’t be compelled to subsidize¬†any¬†of this tinkering. ¬†These companies should find investors on their own, not drain the wallets of taxpayers. ¬†But XP Technology didn’t start this game – it’s already been played, and we’ve already lost. ¬†It will be interesting to see if the discovery phase of their prospective suit sheds some new light on the “crony capitalist” (or, if you prefer, “venture socialist”) game. ¬†Too bad it didn’t happen before voters authorized another four years of such games.