The Advanced Technology Vehicles Manufacturing (ATVM) Loan Program: Status and Issues

The Advanced Technology Vehicles Manufacturing (ATVM) Loan Program is a Department of Energy (DOE) program designed to reduce petroleum use in vehicles and promote domestic manufacturing. It was established in 2007, when the Detroit 3 automakers—General Motors, Ford, and Chrysler—faced declining sales in a weakening economy at the same time that U.S. fuel economy standards were raised. It provides direct loans to automakers and parts suppliers to construct new U.S. factories or retrofit existing factories to produce vehicles that achieve at least 25% higher fuel economy than model year 2005 vehicles of similar size and performance. The ATVM program is authorized to award up to $25 billion in loans; there is no deadline for completing such loan commitments. Congress funded the program in 2009, when it appropriated $7.5 billion to cover the subsidy cost for the $25 billion in loans, as well as $10 million for program implementation. Since the start of the program, DOE has awarded $8.4 billion in loans to five companies (Fisker, Ford, Nissan, Tesla, and the Vehicle Production Group). As of January 2015, ATVM has $16.6 billion in remaining loan authority. No new loans have been made since 2011. Two companies—Fisker and the Vehicle Production Group—were unable to make payments on their loans, and DOE auctioned the loans off in the fall of 2013. Tesla paid off all of its loan in 2013, nine years ahead of schedule. Of the final loan agreements, DOE has estimated that the projects would create or save 38,700 jobs at facilities in nine states. DOE estimated that annually the projects would displace 282 million gallons of gasoline (roughly 18,000 barrels per day, or about 0.2% of U.S. consumption) and would avoid about 2.4 million tons of carbon dioxide emissions (about 0.04% of total U.S. emissions). In April 2014, DOE announced a number of changes that appear designed to refocus the program to assist vehicle component manufacturers, rather than the vehicle assemblers that have received prior ATVM loans. As of January 8, 2015, however, no new loans have been made. Appropriations for the program do not cover the entire value of the loans but instead cover the “subsidy cost” (i.e., the risk of default). For the original appropriation, Congress assumed a subsidy rate of 30%, meaning that $7.5 billion would be sufficient to fund $25 billion in total loan value. A report by the Government Accountability Office (GAO) estimates that a total of $3.3 billion in subsidy costs has been paid to date, with approximately $4.2 billion unobligated. The unobligated funds remaining for the program have been a point of contention in recent appropriations debates. The House has voted several times to transfer some of the unused appropriation for the ATVM subsidy costs to other purposes. None of these transfers were enacted. Other legislators have sought to expand the program. Two recent federal reports call for rescinding the program’s unobligated balance: the FY2015 budget resolution reported by the House Budget Committee calls for outright rescission, and an April 2014 GAO report recommends Congress consider taking the same step unless DOE can generate new demand for the program.