Eco Car To Be Built With EB5 Funds
This just in from Bloomberg:
by Lisa Lerer
Photographers and tourists swarmed former President Bill Clinton as he admired a Day-Glo orange electric car, barely bigger than a golf cart, parked in Times Square. As cameras flashed, best pal Terry McAuliffe gave Clinton a personal tour of his latest project, proudly describing the tiny car’s features as if it were a new baby.
In many ways, it is.
Since 1980, McAuliffe has raised prodigious sums for lawmakers and presidents and ran the Democratic National Committee. He made millions in real estate, banking, homebuilding and credit cards, sometimes investing alongside the donors and union officials contributing to the campaigns he financed. He chaired Hillary Clinton’s 2008 presidential bid, and last year his ambition to become Virginia governor didn’t survive the state Democratic primary.
McAuliffe’s latest reinvention began in May, Bloomberg Businessweek reports in its Oct. 11 issue, when he bought the Hong Kong-based owner of MyCar, an all-electric two-seater made in southern China. He may be the Democrats’ most famous, and most hyperactive, political salesman. But can he sell cars?
The MyCar is just one slice of an ambitious green strategy, which McAuliffe says will position him to do nothing less than help save American manufacturing, create thousands of middle- class jobs, reduce dependence on foreign oil and, by the way, make some serious money. Not everyone is so sure.
Technically a “neighborhood electric vehicle,” the MyCar accelerates only to 45 miles per hour, travels 70 miles before needing a recharge, and can’t go on a highway.
A Better Place
“If I were investing my money, I think I could find a better place for it,” says Erich Merkle, president of the U.S. research firm Autoconomy. The car “is certainly more of a high- risk venture.”
Where McAuliffe sees the national interest, skeptics see political ambition. Local officials wonder if a fighter like McAuliffe can ever really leave the ring, or if he’s simply preparing for the next round.
“The biggest criticism people had when he ran in the primary was that a lot of political people didn’t even know he lived here because he didn’t get involved locally,” says Mame Reiley, who managed the campaign of Brian Moran, a primary opponent.
$1 Billion Powerhouse
In the past year, McAuliffe founded GreenTech Automotive, which he aims to build into a $1 billion powerhouse. In February he bid to convert a shuttered paper factory in Virginia’s southeast corner into a biomass power plant; he’s awaiting word. He plans to invest up to $1 billion in wind power with a Chinese company, A-Power Energy Generation Systems. He says he’s “jacked up” on fuel cells and is scoping out new technologies worldwide.
“What the Internet was for the 1990s, green jobs are for the 2000s,” says McAuliffe, sitting in his office surrounded by framed and signed photographs of inaugurations and conventions.
This all began, he says, when he spotted the MyCar in London early this year.
“I said to the guy, ‘I’m not a carjacker, I promise you. If I give you $100, can I try this out?’”
Brunch at J. Gilbert’s, a northern Virginia steakhouse, with the management of EuAuto Technology, MyCar’s owner, followed, as did meetings and legal reviews. GreenTech announced the EuAuto acquisition for an undisclosed sum at a May 17 news conference in Hong Kong, with U.S. Commerce Secretary Gary Locke.
McAuliffe then secured from Mississippi Governor Haley Barbour a package of state incentives to build a 400,000-square- foot facility in Tunica, Mississippi. Barbour, the former head of the Republican National Committee, is a longtime McAuliffe associate and former Washington lobbyist.
GreenTech plans to buy parts abroad and assemble the cars in the U.S., creating around 5,000 jobs in economically depressed areas. Besides Mississippi, McAuliffe is looking at sites in Tennessee and Virginia and says he will go to the state offering the best tax breaks and other benefits.
“You want this, you’ve got to offer incentives,” he says. “I want to see legislation. That’s part of our negotiations.”
Mississippi, Virginia and Tennessee are right-to-work states, making it difficult for McAuliffe’s workforce to be unionized. Union leaders were major donors to many Democratic campaigns McAuliffe financed.
When climate legislation died in the Senate last spring, green entrepreneurs were denied billions of dollars in government incentives they craved. McAuliffe says he plans to mount a lobbying campaign to revive some of the proposals, including federal tax breaks, requirements that electricity producers use renewable sources, and subsidies for stations where electric vehicles can recharge.
He expects the MyCar to go on sale mid-2011, after it’s modified to meet U.S. regulations and upsized for American consumers. The first 100,000 will sell for $10,000, with federal and state tax credits knocking the price down to around $8,500, he says.
“No one can afford not to buy it,” says McAuliffe.
Three more hybrid cars are planned for as early as 2013: a sports car, a mid-sized vehicle and a subcompact. He won’t disclose his backers, saying only that they are “strategic investors active in the green technology area.”
McAuliffe says he won’t be tapping his sizable donor network. He has raised foreign capital through the EB-5 program, which offers permanent green cards to foreigners who invest $500,000 in distressed areas, producing 10 full-time American jobs. McAuliffe says he has attracted many investors this way, yet the total amount of money is “infinitesimal,” considering the hundreds of millions he needs for the four cars.
The green strategy may be one way for McAuliffe to pay his political dues. State political experts say McAuliffe is following a strategy pioneered by Democratic Senator Mark Warner, a telecom industry executive who parlayed venture- capital investments in Virginia into a gubernatorial win in 2001 after losing a Senate race five years earlier.
“He could basically say, ‘Virginia needs a governor who can go out there and sell the state, and I’ve done it,’” says former McAuliffe senior strategist Mo Elleithee. “It helps fill in a piece that was missing last time.”
McAuliffe says it’s too early to decide his political future. “If you’re asking me, am I going to walk away from what I believe will be a billion-plus company, I don’t know,” he says. “I don’t, honestly.”
Photo by Wikipedia
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