Trump budget would cut loan opportunity for Lordstown Motors
LORDSTOWN — President Donald Trump's proposed budget would end a loan program Lordstown Motors Corp. could use to update its facility to make electric vehicles.
The executive budget proposal for fiscal year 2021, released Monday, would eliminate the U.S. Department of Energy's Advanced Technology Vehicle Manufacturing loan program, canceling and freeing up the program's remaining $4.3 billion credit subsidy.
Lordstown Motors Corp. has planned to seek $200 million through the program to refit its Lordstown facility, the former General Motors Lordstown Assembly Complex, to be able to manufacture its line of electric pickup trucks.
Ryan Hallett, Lordstown Motors spokesman, said Monday the company has not yet applied for the loan and its business model "stands on its own without it."
"We are continuing conversations with government leaders as we explore our options, but we see it as one of our many options to consider," a statement released Monday says.
The $25 billion ATVM loan program was established in 2007, during the oil crisis of the mid-2000s, as a means to help automakers retrofit facilities for more fuel-efficient technologies. Steve Burns, Lordstown Motors CEO, previously told Mahoning Matters the program was what "launched" Tesla Motors' electric vehicle manufacturing.
Proposals to cut the program have appeared in each executive budget proposal since President Trump took office — for fiscal years 2018 through 2020 — yet the program persists. A federal domestic spending package passed in mid-December preserved the program and appropriated $5 million for it.
Monday's 2021 executive budget proposal critiqued the program for being relatively inactive and having no new loan closures since 2011:
The federal role in supporting advanced technologies is strongest in the early stages of research and development. The government should recognize the private sector's primary role in taking risks to finance projects in the energy and automobile manufacturing sectors. In addition, the relative lack of recently closed loans to new borrowers in these programs indicates they are ineffective at attracting borrowers with viable projects who are unable to secure private sector financing.
Since its inception in 2007 only five loans have been closed under this authority, and since 2011 no new loans have closed. Efforts to increase the attractiveness of the program to potential borrowers have not yielded increased loan activity. The budget proposes to cancel all remaining appropriated credit subsidy.
The U.S. Government and Accountability Office in 2014 recommended rescinding the program's lending power due to lack of demand.
The program has a remaining $16.6 billion in loan authority and eight outstanding applications that were "substantially completed" as of December 2018, according to the office. About $12 billion in ATVM loans sought by six applicants in 2016 and earlier have been on hold for varying reasons.
Of the $8.4 billion loaned as of February 2011, $5.9 billion went to Ford Motor Co., $1.4 billion went to Nissan North America, $529 million went to Fisker Automotive and $465 million went to Tesla Motors Inc., according to the office.
Tesla repaid the loan in 2013; Nissan repaid in 2017.
"This isn't a handout. This is a loan that will be repaid in-full with interest," U.S. Rep. Tim Ryan of Howland, D-13th, said in a news release. "I will be using my position on the House Appropriations Committee to block the Trump administration's efforts to end this important program, and I will continue fighting to ensure Lordstown Motors has everything they need to do their important work and get Northeast Ohioans back to work."
Congress members from both sides of the aisle backed Lordstown Motors' application for the federal loan. Two Ohio senators and eight representatives signed a letter-of-support sent Jan. 22 to U.S. Secretary of Energy Dan Brouillette, urging an Advanced Technology Vehicles Manufacturing loan be awarded to the electric vehicle startup, according to a release from Ryan's office.
The letter was signed by U.S. Sens. Sherrod Brown (D), and Rob Portman (R); and U.S. Reps. Ryan; Bill Johnson (R); David Joyce (R); Marcia Fudge (D); Anthony Gonzalez (R); Marcy Kaptur (D); Brad Wenstrup (R); and Bob Gibbs (R).
A spokesperson for U.S. Rep. Bill Johnson of Marietta, R-6th did not return a call for comment Monday. Johnson, however, responded to the executive budget proposal Monday evening on Twitter:
"The president's budget is just a recommendation to Congress. It is the job of Congress to pass a budget and [democrats] refuse to pass one," he wrote.
"They should stop complaining about something they refuse to do and start prioritizing fiscal responsibility by passing a budget."
The federal appropriations deadline is Sept. 30, before fiscal year 2021 begins on Oct. 1.
This story was originally published February 11, 2020 at 3:52 AM with the headline "Trump budget would cut loan opportunity for Lordstown Motors."