Volt won't get DOE funds until GM passes government viability tests

There are many layers to the deal General Motors has had to accept from Washington. In addition to having 60 days - now down to 51 - to turn things around or face bankruptcy, GM must also convince the government it will remain viable in order to be eligible for $10.3 billion in Department of Energy funds for the Volt.

The DOE's Advanced Technology Vehicles Manufacturing Incentive Program has been slow in handing out funding, and now it seems we have a glimpse at why, at least in regard to GM. Nevertheless, many other carmakers are still waiting for their requested funds as well. Designed to give aid to companies building high-tech fuel-efficient cars, the ATVMIP has about $25 billion total in its coffers.

If GM doesn't get that DOE funding, it won't have the cash to build the two Volt-based hybrids and a third, unnamed hybrid, it has plans for. On the other hand, if GM doesn't convince the government it is still a viable company, the issue of Volt funding may well be moot. The contingency, reports Automotive News Europe, applies to all funds thus far requested from the DOE by GM, including the latest $2.6 billion addition.

What it does mean, however, is that development of those projects could be significantly curtailed or potentially even halted until after the June 1 deadline for the Obama administration's verdict. On the other hand, GM might decide the high-tech Volt's image is worth sacrificing other operations - despite its lack of profitability - and continue development even during the interim period.

That decision of itself could further harm GM's viability in the eyes of the Obama administration, however, weakening the company's chances of securing further general loans, much less the $10.3 billion requested of the DOE.