Startup electric car company accuses Energy Department of corruption

The Department of Energy is coming under pressure from a company that wants to build a partially inflatable car.

San Francisco-based startup XP Technology is building a lawsuit against the Department of Energy, charging it with “corruption and negligence” in the way it has handled the approval of applications for loans meant to support the production of fuel-efficient automobiles.

XP has designed a radical concept for a battery and hydrogen fuel-cell powered electric car constructed of a rigid frame. It has body panels made from expanded foam that’s wrapped in a flexible material similar to the air bags used to protect NASA’s Pathfinder probe as it bounced to a safe landing on Mars in 1997.

The company says the compact car would weigh around 1,500 pounds -- less than half of similarly sized electric vehicles, like the Nissan Leaf -- making it very energy efficient. Small, removable cartridges would allow owners to quickly swap them for fully charged ones, or carry them into their homes to recharge, eliminating the need to utilize the types of streetside and garage-based charging stations that conventional electric cars rely on.

The company has been granted several patents covering technology involved in the vehicle and says it has produced prototypes of all of its components, but has yet to build a complete car.

More On This...

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.”

XP alleges that startup electric car companies like Bright Automotive and Aptera Motors had their application reviews intentionally stalled “in order to force them out of business and protect favored players.” Both of those companies have declared bankruptcy in the past year. XP, which currently has about 7 people working for it, is hoping to move forward with its car, but is currently focusing its efforts on the litigation and is soliciting other companies to join it in the lawsuit.

XP submitted a complaint on its own behalf with the U.S. Court of Federal Claims on Friday, which was denied. But the company plans to have it re-filed through an attorney as soon as this week. It seeks an injunction freezing all Energy Department loan programs until a new approval system has been established, a re-review of previously denied applications and applicable damages.

The Energy Department has not yet commented on the complaint.