Plan to expand U.S. auto loan program faces bumpy road

Democratic proposals to widen the scope of the Department of Energy's loan program for advanced cars could falter in the face of Republican opposition in Congress.

Last week, the DOE said it was planning "an active outreach campaign" for its Advanced Technology Vehicle Manufacturing loan program, created in 2007 to spur the development of plug-in hybrid and electric vehicles.

The department said it has more than $15 billion still on hand to dole out to potential applicants. Currently the program is limited mostly to manufacturers of light duty passenger vehicles or their components.

Two Democratic Senators have introduced a bill to allow component manufacturers further down the supply chain and makers of efficient medium and heavy duty trucks and buses to also be eligible for funding.

"This program has helped American companies retool their plants to create new high-tech products and new American jobs, including helping companies bring jobs back from Mexico," said Senator Debbie Stabenow, a Democrat from Michigan.

Stabenow introduced the legislation with Ron Wyden, the Democratic chairman of the Senate energy committee.

It is unclear exactly how much interest the administration would attract without expanding the parameters of the program, especially while holding applicants to higher financial standards and given political divisions.

The agency promised more than $8 billion in funding to five companies between 2009 and 2011, including a $5.9 billion loan to Ford Motor Co, $1.5 billion to Nissan and $465 million to Tesla Motors Inc.

Tesla repaid its loan earlier this year, but the program's failures have garnered considerably more attention.

This spring, Republicans blasted the DOE for its failure to vet Fisker Automotive, a maker of pricey plug-in hybrid sports cars now struggling to find a buyer and repay nearly $200 million in government loans. The Department promised the company a $529 million loan, but it froze Fisker's credit line in mid-2011.

Last month, the Department put up for auction its non-performing loan to the now-closed Vehicle Production Group LLC, which received a nearly $50 million loan.

"DOE's in a really tough spot," said Ryan Fitzpatrick, a policy adviser for think tank Third Way's clean energy program. "They're operating with a limited amount of financial tools."

In the last few years, other companies, including Chrysler Group LLC, abandoned their DOE loan applications to pursue other options. Some companies said they were discouraged by the government's slow and opaque loan process.

It would help to expand the program to heavy duty vehicles or to allow loans to go toward building out fueling infrastructure for advanced vehicles, Fitzpatrick said.

Republicans in Congress have opposed direct government investment in solar companies, electric car companies and others that would help achieve the administration's clean energy goals, saying such investments amount to picking winners and losers.

Darrell Issa, the head of the House oversight committee, who has led investigations into failures in the government's loan portfolio, said the auto loan program was a "perfect example of government waste."

"At worst, the program threw good taxpayer money after bad," the California Congressman said in a statement. "At best, it has risked Americans' hard earned money on projects that didn't need it or didn't truly advance vehicle technology."

(Reporting by Ayesha Rascoe and Deepa Seetharaman; editing by Ros Krasny)