How Terry McAulliffe Might Kill the Electric Car

By · July 24, 2012

Terry McAuliffe showed MyCar to Bill Clinton

In September 2010, Terry McAuliffe showed MyCar to Bill Clinton. At a meeting of the Clinton Global Initiative, McAuliffe made a grandiose promise to invest $1 billion to build electric vehicles in economically depressed areas of the United States to create green jobs.

On July 6, GreenTech Automotive celebrated the start of production of its first car, a neighborhood electric vehicle (NEV) called MyCar. The launch garnered national media attention due to presence of several high-profile political VIPs. Bill Clinton delivered a speech and posed with the vehicle alongside GreenTech chairman Terry McAuliffe, a longtime friend and fundraiser for the Clinton family.

This week's New York Times Magazine examined McAuliffe's career in politics and the nature of Washington fundraising networks—but did not provide substantial details about MyCar and its dubious business prospects. The company might have deep political connections, but it lacks auto industry experience and stands little chance of success in the marketplace.

Despite the boisterous optimism that McAuliffe and the company's other supporters showed earlier this month, there's no evidence that GreenTech will grow into a regional job-creating powerhouse as promised. McAuliffe said his company aims is to sell 10,000 vehicles during the first year of production. So far, the company has announced plans to deliver about 20 MyCars to local Dominos Pizza restaurants, and a somewhat vague distribution agreement in Denmark that it says could lead to “thousands” of sales there.

Last year, Pike Research released a report estimating the annual worldwide NEV market at 37,000 units per year, projecting it to grow to 55,000 units by 2017. In the United States, low-speed vehicles (LSVs) are limited to a top speed of 25 miles per hour and are prohibited from traveling on roads with speed limits exceeding 35 mph, making them impractical for most commuters.

The lithium ion-powered version of MyCar will cost around $18,000 and carry a claimed range of about 115 miles―a big price tag and a lot of battery power for a vehicle that is commonly regulated under the same rules as golf carts. Whether that combination proves attractive to consumers and private fleets remains to be seen, but demand for full-speed feature-rich EVs like the Nissan LEAF has so far proven to be softer than expected.

MyCar

The lithium ion-powered version of MyCar will cost around $18,000 and carry a claimed range of about 115 miles.

McAuliffe says GreenTech has raised $100 million so far―although the company won't give any details about where that money is coming from and how much of it is destined for the U.S.-based manufacturing side of the business as opposed to its operations in China. Does a company that sells $18,000 vehicles in the niche NEV market really warrant $100 million in startup capital?

The Back Story

What details can we piece together about GreenTech? The company was born out of a failed partnership between current CEO Charles Wang and a Chinese auto magnate named of Yang Rong. Terry McAuliffe effectively replaced Rong as chairman of the company. At the time, what would become GreenTech had little money and owned no technology of its own. McAuliffe and Wang purchased an existing Hong Kong-based NEV manufacturer, EUAuto, after McAuliffe saw a MyCar on the streets of London and offered its owner $100 to take a brief test drive.

GreenTech received support from politically influential members of both parties. Former Mississippi governor Haley Barbour tangled with Clinton and McAuliffe throughout the 1990s as chairman of the Republican National Committee, but at the July 6 event, the three men stood side by side in support of a business that claims it will bring thousands of jobs to Barbour's state.

Hillary Clinton's brother Anthony Rodham sits on the board of an investment group created to raise funds for GreenTech, as do former Louisiana governor Kathleen Blanco and a former head of the IRS. GreenTech CEO Charles Wang formerly worked at one of Washington, D.C.'s most influential law firms.

EUAuto's operations have since been split between GreenTech's Virginia headquarters and a converted elevator factory in Horn Lake, Miss. GreenTech says it will soon open large new factories in China and Tunica, Miss., planning to build MyCar's drivetrain and battery management system at its U.S. facilities for final assembly in Asia. The company promises to create an initial 426 jobs in the United States, ramping up to as many as 1,500 by the end of next year.

Path to Citizenship and Start-up Funds

For part of its funding—GreenTech isn't saying how much—the firm is counting upon the little-known EB-5 program, which allows prospective immigrants to gain a path to citizenship by investing $500,000 or more into approved projects. At the end of a two-year period, if a project is deemed to have created 10 permanent jobs, the investor and his or her family are issued visas.

As reported in the recent New York Times Magazine article, GreenTech's “primary investment group” is Gulf Coast Funds Management LLC, a firm specializing in EB-5 fundraising. Both McAuliffe and Gulf Coast CEO Anthony Rodham have travelled to China to speak at investor conferences aimed at attracting wealthy Chinese families to the program.

Unfortunately, the EB-5 program has recently proven susceptible to fraud, leading to a chorus of calls for reform. Prospective immigrants are typically charged a non-refundable fee of $40,000 or more by firms like Gulf Coast, and are sometimes told by agencies in their home countries that their investments are guaranteed. In several instances, families have lost their money and faced deportation due to alleged fraud.

Asking for Trouble

Failure at GreenTech could prove disastrous for its EB-5 investors and the local communities it's made promises to help. Moreover, if GreenTech is unable to deliver on its promises, it could affect the reputation of modern electric vehicles.

In the wake of the Solyndra collapse, Republicans have already been targeting government support for electric vehicles. (Never mind the major distinctions between viable EVs and a questionable neighborhood electric vehicle.) Though MyCar doesn't qualify for federal loans, it does stand to receive at least $10 million in incentives from the state of Mississippi. Failure for GreenTech would be likely to increase media scrutiny for electric vehicles, particularly with such politically polarizing figures as Clinton and McAuliffe associated with the project.

Comments

· Spec (not verified) · 2 years ago

NEVs have a role to play. But a $18K NEV that can only go 25mph is just a non starter. Why not buy the Mitsubishi-i that costs $21K after the tax-credit?

Medium Speed vehicles that could go 35mph might stand a chance . . . but at 25mph, you might as well get an electric bicycle.

· · 2 years ago

The Smart will not be much expensive, and it's real automobile. Now that the industry's big guys are in, there's little room left for start-ups.

· Electricnick (not verified) · 2 years ago

NEV do play an important role but at that price, you better put a lot of features to make it attractive. I see that people living inland in California can get the Mitsubishi i MiEV for about $17,000. I've driven that car over 80 MPH on highways.

Good article describing the unhealthy political embroilment. I'm gonna go and convert an old Alfa Romeo spider for a fraction of the price instead :)

· Anonymous (not verified) · 2 years ago

It's maximum speed is 35 mph, with a governer. It can go 45 mph without the governer (in Europe). I've begged them to sell me one, but no luck yet.

· Bill Howland (not verified) · 2 years ago

Im very suspicious of any thing Terry is involved in... No surprise his venture is going tits up, since that was the master plan from the start. Another way to launder money.

· · 2 years ago

According to the GreenTech website MyCar will have a top speed of 25 mph in the US.

http://www.wmgta.com/en/news/us-based-greentech-automotive-unveils-low-s...

· Spec (not verified) · 2 years ago

Thanks for the crazy conspiracy theory viewpoint, Bill Howland. Now go back to Glenn Beck, Alex Jones, or who ever.

The car probably can go 35 mph but in most states the legal limit is only 25mph. There are a handful of states with MSV laws that allow 35 on roads posted up to 45mph.

· Anonymous (not verified) · 2 years ago

From their website:
http://www.wmgta.com/en/products/mycar-nev

MyCar is a Neighborhood Electric Vehicle in the US, but can be adapted to 45mph for in Europe. NEVs are low-speed vehicles; and depending upon the state you live in are limited, by law, to 25-35 mph.

· Anonymous (not verified) · 2 years ago

I've been in the office facility in Tunica and the "manufacturing" facility in Horn Lake as well as having met with the local executives. The whole thing is a sham.

· Bill Howland (not verified) · 2 years ago

@Spec

Ad Hominem attacks are not necessary here. I have a lot of money in electric cars, have been around the block, so to speak, and time will tell whether I'm right. I've been right to date. McAuliffe will no doubt finanacially benefit hansomely, whatever the outcome in this current project..

Generically though, will an $18,000 / 110 mile / 25 mph car be successful? Probably only with heavy governmental assistance, which is definitely a feather in McAuliffe's Cap, seeing as he can make it forthcoming, as stated, apparently not for this car, but then there will always be other cars upcoming in his career.

· Denis Lang (not verified) · 2 years ago

This 'advocate' from Plug In Cars has his own agenda to write rotting material about another plug-in-car...the NEV. Follow the money trail and you'll find his true agenda/motive.

How mainstream auto-makers are helping consumers gain confidence towards Neighborhood Electric Vehicle (NEV)

Plug-in hybrids electric vehicles (PHEV) can achieve much greater societal benefits than the current non-plug hybrids that are on the market today. PHEV can achieve 30-70% less CO2 than a non-plug hybrid and 40-80% less petroleum use. Mainstream automakers are building upon their success with non-plug hybrids, to introduce plug-in vehicles in all vehicle sizes. These are mass-market vehicles that will provide a technological pathway backward to Neighborhood Electric Vehicles (NEV). The mainstream automakers will provide the battery volumes we need to reduce battery cost, and will give consumers the experience they need to gain confidence in relying on a pure-battery electric vehicle.

The Neighborhood Electric Vehicle (NEV) will not only change the way that you drive, but the way you live. It’s not a car, it’s a cause.

· · 2 years ago

Denis,

The point is not to knock NEVs, but rather that this particular company is getting into the NEV market in the wrong way. GreenTech was designed from the very beginning to depend upon public funds and an immigrant investment program that would allow it raise money it wouldn't have been otherwise able to get from private investors. Why not? Because although there is a future in NEVs, this company will not be able to sustain the sales to justify its business model.

In order to reach its goal of 10,000 sales in the first year, GreenTech essentially needs to capture 25% of the international NEV market overnight. For most potential NEV buyers, having 115 miles of range simply isn't worth paying more than twice as much as you otherwise might have to for a new low-speed vehicle that is equally capable of getting you around your immediate area, provided that you plug it in when it's not in use.

I'd love to be proven wrong on this one, but I fear that when all is said and done the end result of this project will be an empty factory in Alabama and some hard-working prospective Americans out their life savings.

As far as following the money goes, I can assure you that I have no financial interest in the failure of this company or NEVs in general. I'm just not looking forward to having to explain to people why the failure of GreenTech has nothing to do with federal EV incentives, the AVTM program or the auto bailouts once Limbaugh, Cavuto and company have sunk their teeth into its carcass.

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