When you do the math, promoter extraordinaire Terry McAuliffe's grand hybrid vehicle plan just doesn't add up
Terry McAuliffe, the former head of the Democratic National Committee and political ally of Bill and Hillary Clinton, has bold and beautiful plans to hire U.S. workers to produce hybrids and electrics.
McAuliffe says he can develop hybrid powertrains, assemble highway-ready vehicles that meet all federal safety and emissions standards, and employ 5,000 U.S. workers. He even plans to export advanced parts to a planned joint-venture auto-assembly plant in China.
"The powertrains, batteries, will be made here and shipped" to China, McAuliffe said Aug. 8 on "The Daily Rundown," a talk show on MSNBC.
But even casual scrutiny of his vision reveals overwhelming obstacles. Let's be plain: His plan is dead on arrival.
He casts himself and his company as part of the solution for a country struggling with 9 percent unemployment, unsparing global competition and gridlocked politics.
But McAuliffe, a born promoter who set eye-popping records as the Democratic Party's fund-raiser in chief, glosses over the sheer magnitude of the task.
To understand the challenge, take General Motors. It invested more than $1 billion in the Chevrolet Volt plug-in hybrid and its technologies, which will be spread over other upcoming vehicles.
In recent years GM has added nearly 2,000 engineers to support its various hybrid and electric-vehicle technologies. And it has spent $700 million in Michigan alone to support vehicle electrification, including test facilities, a battery manufacturing lab and special equipment at its Detroit-Hamtramck assembly plant.
And what does McAuliffe's company, GreenTech Automotive, have? About 50 employees, says Alan Himelfarb, executive vice president for strategic planning. Not even 50 engineers. Fifty total employees.
What keeps the vision alive is McAuliffe's audacity. With confidence and verve, he spells out his job-creating optimism on friendly national cable shows such as "The Daily Rundown" and "The Ed Show," also on MSNBC.
And he wraps his goals in feel-good hot buttons: cleaning up the environment and taking on the growing economic might of China.
"We can achieve two important goals at once. We can provide China with clean technology and help reduce carbon emissions in the country," said McAuliffe, chairman of GreenTech, in an Aug. 6 press release about the China factory. The China project will create 2,000 jobs for Americans, he said.
Political pro Terry McAuliffe has a track record raising big money -- but can he put hybrids on the road?
McAuliffe, a high-energy speaker with a quick and charming smile, is a superb fundraiser. His biography on the GreenTech Web site says that under his leadership the Democratic National Committee set party records by raising more than $535 million.
After a four-year stint at chairman of the committee from 2001 to 2005, he was chairman of Hillary Clinton's presidential campaign. In 2009 he ran unsuccessfully for governor of Virginia.
In the auto industry, though, he's a newcomer. Bold auto visions are fine. But they require staggering amounts of money and manpower. And there's no tangible indication that McAuliffe has either.
That hasn't slowed McAuliffe's promotional machinery. Most recently, GreenTech said on Aug. 6 that it had signed a deal to construct a joint-venture factory in China to assemble 300,000 vehicles a year for the Chinese market.
The Chinese partner is Shengyang Zhong-Rui Investment Co., which GreenTech says has investments in banking, commercial real estate and Chinese airlines. But no investments in automotive operations are listed in the GreenTech press release.
GreenTech says the vehicles, "subcompact, compact, midsize and sports," will be powered by "U.S.-made high-efficiency combustion engines, hybrid powertrains and pure electrical drivetrain" and sold only in China.
Hybrid powertrains, which combine an internal combustion engine, an electric motor, regenerative braking, a large propulsion battery and other advanced components, require millions of lines of software code and world-class engineering and manufacturing.
Meanwhile, GreenTech's Web site also says is has a line of vehicles in development that will be "fully NHTSA- and EPA-certified, full-speed, all-road vehicles." The autos will be assembled in a plant in Mississippi that the company acknowledges is still in the planning stages.
GreenTech, along with suppliers, will invest $1 billion in the Mississippi assembly complex, the company says. A 2010 press release says the cars will go on sale around 2013-14.
And the Web site of the Ordos provincial government in China says GreenTech pledged to start production of hybrids and electrics at its plant in 2013.
But last week the company scaled back those estimates.
"Our expanding product portfolio, including hybrid and electric full-speed vehicle will come in due time and we have not yet set a timetable for the next product introduction" after this year's neighborhood electric vehicle, the company said in a statement. "We fully understand the challenges in time, money, and technical expertise to produce a quality hybrid or electric vehicle."
Even without a timetable, it is not credible that a company with 50 employees now can develop, even with help from major suppliers, a full line of vehicles, master hybrid powertrains, construct an assembly plant and put together a dealer network.
"We are very realistic'
Last week, GreenTech's Himelfarb acknowledged skepticism about starting an auto company from scratch. But he said, "We are very realistic about the challenge."
He made these points about the gap between the vision and reality:
-- Staffing. GreenTech's staff is small now, but it is hiring and plans to have 100 employees by year end, Himelfarb said. And it plans to use major global suppliers and engineering firms with the talent and resources to develop vehicles and powertrains. So the jobs promised by GreenTech could be at suppliers. Himelfarb declined to name those suppliers.
-- Money. Himelfarb insisted GreenTech has money to meet its business plan. "We are very well financed," he said. He declined to reveal the source of the company's funds.
-- Mississippi assembly plant. Site preparation has started in Tunica County, he said, but GreenTech has not yet hired major contractors capable of building and equipping an assembly plant.
-- Neighborhood electric vehicles. To "get its feet wet" in autos, Himelfarb said, the company is gearing up to produce low-speed electrics, which are mainly suitable for resorts and retirement villages. They have turn signals, seat belts and other safety features but are not legal on roads with speed limits above 35 mph.
It plans to start modest production of the MyCar electric at a former elevator factory in Horn Lake, Miss., also in Tunica County, 15 miles south of Memphis, Tenn., in the third quarter. MyCar was designed by a Hong Kong company GreenTech acquired in 2010.
GreenTech says it has signed Greenabout, a Danish company, to distribute American-made MyCars in Denmark.
In expansive tones typical of its press releases, GreenTech makes over-the-top forecasts for the MyCar. A press release says: "We will make the first 100,000 U.S.-built MyCars available to consumers for $10,000 apiece."
But the entire market for low-speed vehicles in the United States last year was only 25,650, says International Market Solutions, a market research firm in Cortlandt Manor, N.Y., that specializes in what it calls small, task-oriented vehicles. Low-speed vehicles include golf carts and most vehicles that generally are called neighborhood electrics.
In a written statement to Automotive News, GreenTech said neighborhood electrics "are a small market for sure, at least right now. We have a few ideas on how to create some awareness and build that market. Our goal of 100,000 units is a cumulative sales figure over time. We look forward to achieving that."
Like all of GreenTech's projects, its neighborhood electrics are long on promotion and short on credibility. And road cars are a lot tougher to make and sell than golf carts.
Lindsay Chappell, Mike Colias and Yang Jian contributed to this report
You can reach Charles Child at firstname.lastname@example.org.