Hi, I'm David with EV World News. We talk about electric vehicles, green energy, and the stock markets. Today, Bill and I have a special guest. We have the outgoing Director of the Loan Programs Office at the Department of Energy. Jigar, welcome to our show today.
David, thanks for having me.
Now you're also known — you were the founder of Sun Edison, and I'm known as a friend of Bill Moore's.
That's really important. That's really important. Bill is the original OG electric vehicle website guy. I mean, Bill's been doing this for 27 years, right?
That's exactly right. Yeah, I always laugh. We get all these comments on YouTube like we don't know what we're talking about. Like, well, who's a bigger expert on this than Bill? Okay, who are you going to find that knows more about electric vehicles than Bill does?
Exactly. Okay, he may not be able to tear apart an electric motor, but it's just always, you know, funny that these people think, oh, you guys don't know anything.
It's like, yeah, it is quite interesting, and I'll even have them debate about our engineer that comes on, you know, like he doesn't know what he's talking about. It's like he literally consults for, you know, utility companies, states, and countries.
Well, you know, these days the definition of an expert is ever changing.
So as I understand now, are you no longer the director?
No. When a president leaves office, all of the appointees that he appointed also leave with him. So we all are asked to submit our letter of resignation, and they are normally all accepted by the incoming administration.
Okay, I did not know how that process worked, because I know that right now that incoming administration, their cabinet positions are all going through, you know, the Senate.
Yeah, there are thousands of political appointees in an administration, some of which have to be confirmed by the Senate and others don't. You know, the president can just put that person in place.
So when you came in, were you put in that position by Jennifer Granholm, or were you put in by President Biden?
You're always put in place by President Biden. Every political appointee is technically a presidential appointee. Now, you know, I can imagine that Jennifer Granholm may have selected me, but you're officially put in place by the Presidential Personnel Office.
Well, so you know, we're on here, and as I said, we talk about electric vehicles and green energy. I love talking about other things — solar, wind, things like that — and how they affect things. So let's start to talk about successes from the Loan Programs Office, and I'd like to know what you think were some of the better projects you guys got involved with, what kind of lending, and how that looks.
Well, yeah, let's start with the Loan Programs Office exists to help people do big things, right? And in general, when you think about the loan that Tesla took out in 2009, there was nobody in their right mind that was going to give them a $465 million loan, and so they took one out from the Loan Programs Office and repaid it, which was great. And I think when you look at the next set of loans that were done even back then, part of the reason why the Loan Programs Office had this program was because a lot of folks were moving to Mexico, and we needed a program to try to keep people here in the United States. And so Ford used the program, and Nissan used the program, and others.
And so in this particular four years, there were a lot of battery manufacturing facilities, and the question was, are they going to go to Mexico or are they going to happen in the United States? And our program was used to put a lot of those battery manufacturing facilities in place in the United States. And so there was a big loan to the Ultium platform with General Motors, and the Blue Oval SK platform with Ford, and the Stellantis platform. But then we also did a lot of critical minerals loans, right? So Thacker Pass in Nevada, and Ioneer in Nevada as well, and then we had a conditional commitment to the Energy Source Minerals folks in the Salton Sea. But we also did graphite processing in Vidalia, Louisiana. But we also did supply chains — so Aspen Aerogels in Georgia, that helps to keep fire risk down, right, from their thermal barrier material. Entek Battery Separators in Indiana, and so the list goes on and on.
But I think that when you think about the full battery supply chain, we were part of a lot of that, and then we had other grant-making offices at DOE that did a lot of that work as well. But today we're on track to 400 gigawatt-hours of battery manufacturing capacity here in the United States by 2027, all the critical minerals that would feed them, plus all of the other pieces that would go into them. And so I think we will have a largely independent supply chain by the end of the decade.
Nice. Are any of those battery companies — so here's one of the things — it seems like this battery manufacturing takes a long time to go from start to being online. Are any of these guys online and producing?
Oh yeah, Ultium already is online and producing. I think Blue Oval's first facility is online. BlueOval SK down in Kansas has started delivering cells. You've got the existing gigafactories that are producing, right? And so yeah, we probably have something on the order of 150 to 190 gigawatt-hours worth of batteries that are already producing.
Nice, nice. Can we just, to bring people up to speed, maybe sort of explain a little bit of the background of the Loan Programs Office and sort of its scope and how that contributes to the national good, so to speak?
Yeah, so it was started by Republicans in the Senate and the House in 2005 during the Energy Policy Act under Bush. And the whole purpose of it was there was a recognition by Congress at the time that we invent everything here in the United States, but we just don't commercialize any of it here. So we always license it to Asia or Europe or other places to be scaled up. And so therefore all of our R&D that we spend money on doesn't really lead to job creation here in the United States. And so we needed something that wouldn't compete with the private sector, but actually step in when the private sector was unwilling to.
And that started with the Title 17 programs, which is how we fund nuclear projects or geothermal projects or, at the time, solar and wind projects, right? Because the private sector wasn't doing those projects, or batteries, etc. And then later we got the Advanced Technology Vehicle Manufacturing program, and that program was really designed to make sure that all of our factories don't go to Canada and Mexico, and that we left a lot more factories here in the United States. And so that program doesn't require innovation, although there is a lot of innovation in most of these loans that we did, but that just requires onshoring and reshoring here in the United States.
All of the programs from the Loan Programs Office are designed only for projects here in the United States, so we can't fund anything overseas. When I came into office, there were about $34 billion worth of loans that we had already completed. During my four years in office, the team did about $61 billion worth of new loans, which is great, and we processed another $40 billion or so worth of conditional commitments that'll get closed sometime this year.
Okay, now when you say closed this year, I mean the White House came out with an announcement. I think it takes effect at five o'clock this afternoon Eastern Time to, I assume, temporarily suspend payments to those programs. Is that true?
Yeah, I mean, the announcement that came out of the Office of Management and Budget has nothing to do with the Loan Programs Office or energy, right? It has to do with the fact that there's a desire to invalidate the entire purpose of the US government. And so they've banned USDA from sending food aid to Africa, they've banned folks at the State Department from doing work that they do, they've banned the Department of Education from reimbursing your local school district that is taking care of a special needs child, right? There's all sorts of things that the US government does, and they banned any money from leaving the US government for those purposes, right? And that's something they want to take to court, and they're going to figure that out. My sense is that the sanctity of US contracts is probably a good thing, but the court will decide whether that's true or not.
Right. So how did — let's say I have a project here in the United States — what was the process that I, as a company, would have to go through to apply for a loan? What was kind of the procedures there?
Yeah, I mean, it's the same as a commercial bank, right? Like, what's your project, right, and how do you expect to pay us back? So it wasn't any more complicated than that. But you can imagine that folks who can't get money from a commercial bank usually, or in the case of ATVM, can't get it as low cost as us, are generally ill-prepared to fill out the paperwork, right? And so they required a lot of mentorship. And the average loan size out of our office was $2 billion, right? So figuring out how to help them fill out the paperwork and give us the information we needed was something we had to do. We couldn't lower our standards; we had to raise their ability to do their work, right? And so that was a lot of the work that we had to do.
Some of the folks obviously know what they're doing, whether it was Ford or Stellantis or GM or others, but there are lots of other companies who were younger in their maturity cycle, and there was a lot of work that we had to do to get their game up to where we needed it to be.
Yeah, average loan is $2 billion. I'd like to think they had, you know, they knew what they were doing, right?
Well, you know, the thing about this country, right, is that we just haven't believed in ourselves in 40 years, right? I mean, I think that if you talk to the average person who's in the invention space, they're like, yeah, we know how to invent stuff here, but we don't know how to make stuff here, right? And so, you know, the making stuff happens in China or Germany or other places, right? And so, you know, helping people understand that we needed to gain our confidence back around how do we do big things in this country was something we had to do.
But the $2 billion number is a pretty standard number. I mean, I think you guys have followed Tesla for a long time, you know, I mean, the amount of money they were losing every year in the 2014, 2015, 2016 timeframe was certainly in the billion to two billion to three billion dollar a year range, right? And so that is what it takes to really commercialize these kinds of technologies, and when you get to the other side, you're making that much money every year.
Right, right. No, I get that. You know, it's interesting looking at the success of Tesla, Bill, and I look at a lot of hopeful companies like Canoo just went bankrupt. We've seen a few others, you know, you had, was it Workhorse? You know, Nio's not done too well. You know, there's been a lot of companies that we see they have good ideas, they just can't ever quite get over the hump. Or a good example right now is Aptera. So Bill and I are like, hey, somebody step in and help Aptera, you know, their three-wheeled solar-powered car, two-seater.
They don't really have a customer base. I mean, the thing that I think people just don't understand about the car industry, which I think you guys understand, is that selling a thousand units only works if you're making luxury sports cars like Battista, right? If you're making something that's at an affordable price point for consumers, the number is 400,000 units a year. Wow. That's when Tesla became profitable, was 400,000 units a year.
Rivian is not at 400,000 units a year, but they're heading in the right direction, and if their R2 comes out, then I think they will likely have a price point that might be able to attract that many sales per year, right? But Lucid, Canoo, Workhorse, right, none of those folks were on track to 400,000 units a year. So then the question becomes, what are you? If you're a glorified bicycle that basically just puts a rain shield on yourself, okay, maybe you could just make that in like a car, you know, sort of like Pimp My Ride, right? And maybe you could just do it by hand and it's fine or whatever. But if you're going to make a fully automated line and all this other stuff, having a thousand firm pre-orders doesn't get you there.
Yeah, well, Aptera, I think, was it 60,000 pre-orders?
No, no, no, no, no. They have 60,000 people who said that they would give them their email address and maybe a $20 check, and that's fully refundable. And if you talk to Lawrence Berkeley or you talk to other people who've done the math, less than 3% of those people convert, right? And so, like, I just — and it's not — but it is just truth, right? The thing that, like, I love the fact that we have a Kickstarter nation. I love the fact that you can make some cool new backpack or pair of blue jeans or an Aptera and get everyone to like crowdsource $1,000 or $20 worth of deposits. That's great.
But when you talk about something that you and I both know that we're talking about, which are electric vehicles, right, there's going to be a lot of carnage, just like there was in the 1910s and 1920s and 1930s. A lot of those folks went out of business, and some of those brands stayed alive, like Oldsmobile or Buick or all those people, right? They got absorbed by General Motors, but a lot of those brands died, and you've never heard of them.
The same thing is true with the steel industry, the same thing is true with the railroad industry, the same thing is true with lots of people who do what we all think of as infrastructure. And so that process of people dying is not a bad thing. We don't want to save them all. Like, that's capitalism. What we want is a sufficient number of models for consumers to buy so that they feel like they have choice, right? So they're not just picking one car, but they've got eight cars to choose from, and we're there now.
Oh, we certainly are. We certainly are. Bill and I cover a lot of interesting models. A little while back we were covering Sony has this new car called the Afeela that they showed off at CES, and they're starting to get pre-orders for it, but it's $90,000. Sony wants to enter the EV car space in that top tier.
Of course you would. Why would you start your EV journey with a $10,000 car?
Well, it's not so much that I'm suggesting they start with a $10,000 car. Their mistake, in my opinion, is that they're choosing to do a sedan, which is Lucid's mistake. I feel they should have been coming in with an SUV. Yeah, I mean, clearly Americans love SUVs, but you know, I've got a good friend of mine who will only drive sedans, and so maybe there's a niche market that they can exploit there.
I mean, look, I hear you, and far be it from me to claim to be an expert in any of these things, right? I mean, I know how infrastructure works, but I don't know how to design a car, so I'll let them do that. But I think the bigger thing for me is just the fact that we have so much competition today in this space makes me confident that this electric vehicle future, which frankly is just a high-performance, better car future, is like unstoppable now.
It is. There's no question. You know, I just can't see where anything could prevent EVs from taking over at this point, you know, and I think that's a good thing. But we get a lot of criticisms of, you know, EVs can't do this or do that. Most of it's just wrong.
Well, or maybe it's right, right? I mean, maybe it's right, but ultimately you and I both know that the vast majority of people who buy an F-150 truck take it to the mall and back, right? They never carry a boat trailer or whatever it is. So look, I agree with people — if you're carrying a boat or other things on a regular basis, it does reduce your mileage, right, if you have an EV. But the vast majority of miles that are driven by F-150 trucks are not hauling anything, right?
So like, I understand that in edge cases that electric vehicles are not quite there yet, right? And you know, some people feel like fast charging doesn't work for them, and you know, and all these other things, and I totally get it. But I think you and I both know that for, you know, 50, 60, 70% of all the cars purchased every year, most folks are just driving them to work and back, you know, getting groceries every once in a while, and what we have today is awesome for those people.
No, I'm with it. You know, it's funny though, but all things even, you know, things like charging, there's new tech coming out. We can see where in five years people are going to be charging in about a third of the time it takes now.
Yeah, I agree with you, but let's be honest with ourselves, right? The Tesla experience is seamless, right? So like, I love the Tesla experience. When I go to visit the national parks every spring break with my son, we only rent Teslas because they always work. I have a CCS EV at home, and you know, like when my parents were in the market, I told them, no chance you should buy an EV, you should buy a plug-in hybrid, because they're like 76 years old and they don't want to carry a 40-pound CCS charging cord at a DC fast charger.
And so they're plugged in their garage at, you know, 110. They drive less than 34 miles a day, so they are at 95% of their miles are electric. And when they want to drive to North Carolina or New York, they just fill up on gas, which is what they're used to, and I think that's fine. And the fact that the state of California is mandating that plug-in hybrid vehicles this year have 50 miles of range means that for like 99% of consumers, they should just get a plug-in hybrid vehicle, and then their life doesn't change all that much, right? They plug it in at home, and then they fill it up on gas on long road trips, and I don't even have to teach them about fast charging, right?
Right, right. There definitely is some simplicity to that.
And on top of that, who wants a 150 kWh battery in their truck? I mean, what the hell? Like, you might as well have a 50-mile range battery that's whatever it is, like 27 kilowatt-hours in your truck, and that probably meets almost all of your needs, right? And so like, why would you carry around a 150 kilowatt-hour battery pack everywhere you're going?
So part of what I think we need to do is to take away all the tribalism in this industry. And those of us who are super excited about the DC fast charging and one-third the time, you and I can like nerd out about that. For the rest of the people who just don't care, they can just fill up on level one charging in their garage.
Yeah, I did, by the way. I did. You know, I got my Fiat 500e back in 2019, and for three years I only charged it at 110.
Yeah, I mean, you know, you don't drive that much, and you get, you know, whatever it is, you get like 50 miles a day of range at 110.
Nice, nice. So when you and Bill started out on this journey years ago, did you ever imagine yourself being in the middle of a political firestorm?
Well, I don't know what firestorm you're talking about. Look, I think Bill and I, from the first moment we talked, which was probably 1999 or something like that, I think both of us had a fascination for commercialization, right? Me on the solar side, right? I was working on solar at the time, and Bill on the EV side. In 1999, the technology was ready for both technologies, right? Solar was fully technologically mature — like the costs weren't low yet, but the technology is mature — and EVs were the same. Like, EVs were fully technologically mature, right? You had the EV1, you had like, you know, those S10 pickup truck conversions with lead-acid batteries. Like, we had all sorts of stuff, right? And it worked, right? It all worked.
And so I think a lot of what we talked about was commercialization, and some of that is finance, which is my background, and you know, some of that is the air cover that you need to allow for consumers to accept these new technologies, which is Bill's expertise, right? Which was giving people comfort that they were not necessarily out on a limb by themselves, that they had a whole group of people who were thinking and feeling the same way that they did, and they could all jump in this living pool together.
Yeah, yeah, to be a first, you know, early adopter. And I think both of us taught each other stuff. Yeah, you were at the time that we met, you were working at BP Solar, right?
That's right, yeah, yeah. So I taught, and then went to have a talk with Goldman Sachs, and then from that, SunEdison emerged.
Yeah, that's right, that's right.
So, you know, I taught Bill finance, and he taught me communications and media.
Nice, nice, nice. A long and fruitful partnership and friendship. All right, so do you think the momentum you built at the Loan Programs Office is going to stall now?
Never. I mean, look, I think that again, you know, look, the thing with the Biden administration is that we had maybe 500,000 cars that were sold in 2020, right? The last year of the Trump administration. And you know, now we're at a full, you know, 12% of all cars sold.
Yeah, I think — no, I think we hit 1.5 million last year.
Oh, okay, that would be including plug-ins.
Yeah, plug-in hybrids, of course. Yeah, yeah.
And so, you know, I think so we are way higher today than we were then. I think the infrastructure is far more profitable today than it was then, right? Back then the DC fast chargers were at 5% utilization. Today, EVgo in their conference call said that they're at 24% utilization. Wow. Right? And so that means that like they're actually profitable at like 18% or 17% utilization.
Oh, that's amazing news. That's amazing news. Yeah.
