Terry McAuliffe — Fast Talker or Visionary?


by James A. Bacon

I have renewed confidence in the judgment of the professionals at the Virginia Economic Development Partnership (VEDP). According to emails uncovered by an Associated Press through a Freedom of Information Act (FOIA) request, they evinced skepticism of an electric-vehicle manufacturing project pitched by Terry McAuliffe, chairman of GreenTech Automotive.

The golden-tongued McAuliffe was one of the most successful political fund-raisers in U.S. history when he served as former chairman of the Democratic National Committee and now is a presumed favorite for the Democratic Party of Virginia nomination for governor next year. In 2009 he was shopping around for a location to build a manufacturing plant for the company’s two-seater electric vehicles. Not only would production of the vehicles  lead to the creation of thousands of direct and indirect jobs, the company claimed, the U.S.-based operation would contribute to a positive balance of trade by exporting much of its production to Europe and China.

One might have thought that McAuliffe had an “in” with Virginia, where then-Governor Tim Kaine had assumed the mantle as chairman of the Democratic National Committee. It’s a credit to Kaine that he did not intervene — or, at least, there is no insinuation that he did — to get McAuliffe any special treatment. Reports the Associated Press:

From the start, GreenTech officials urged Virginia officials — including Kaine — to implement the program. Just as quickly, VEDP officials became wary.

“This company is a complete start-up venture and it appears the management team has no previous experience in automotive manufacturing,” VEDP’s Mike Lehmkuhler wrote in a Sept. 10 email to Patrick Gottschalk, then Kaine’s secretary of commerce.

In October, GreenTech announced plans for a plant in Tunica County, Miss., best known for its nine casino resorts about half an hour south of Memphis, Tenn. That surprised VEDP officials who had scheduled site visits the next two days for GreenTech executives near Waverly, Danville and Martinsville, a city with persistent double-digit unemployment rates.

Later in October 2009, Lehmkuhler wrote in an email to GreenTech executive Gary Tang that after a second review of the company’s business plan, “we still do not see a unique value proposition that explains how GreenTech will reach forecasted sales.” He noted GreenTech lacked brand recognition; had not demonstrated vehicle performance; had no federal safety and fuel-economy certification; no emissions approval from the Environmental Protection Agency; no distribution network; and “no demonstrated automotive industry experience within the executive management team.”

In the heavily redacted email, Lehmkuhler noted market dominance by high-mileage hybrid cars from established automakers such as Toyota, Honda, Ford and Nissan, and pressed Tang about the competitiveness of its MyCar vehicle, the efficiency of its production models and its financial backing.

McAuliffe chose Mississippi over Virginia for an investment — amounting to $1 billion between GreenTech and its suppliers — because, in his words, “No one else’s offer was even close to [Mississippi] Governor Barbour’s. We can disagree on political issues, but this is two people from two different parties coming together. He’s been very aggressive in bringing in the carmakers, so now he’s saying, ‘Let’s try an electric.’ It’s a win-win for everybody.”

Bacon’s bottom line: I have often questioned Virginia’s use of tax incentives and other subsidies to close corporate-investment deals. In a recent post, however, I noted that Virginia’s incentives are modest compared to those of many other states. Now the revelations of the GreenTech episode suggests that VEDP is discriminating about the projects it takes on as well. It builds confidence to know that McAuliffe’s political connections won him no favors in the Old Dominion.

GreenTech Automotive will be an interesting company to watch. The company claims that the stylish little MyCar EV will be able to run 115 miles on a charge and will carry a price of $15,500. The car will have a top speed of 45 miles per hour, however, limiting it to urban markets. The automotive press is dubious that the business model is viable.

In 2011 Automotive News declared McAuliffe’s plan “dead on arrival.” It took GM nearly 2,000 engineers to to support its various hybrid and electric-vehicle initiatives. GreenTech has 50 engineers. GM may have bloated overhead but GreenTech may be severely under-powered.

Earlier this year Hybrid Cars noted that the cars would be restricted in the U.S. to roads with 35 mph speed limits and that they pose major safety concerns. “The odds appear to be considerably stacked against GreenTech succeeding as a significant vehicle manufacturer in the long term.” On the other hand, GreenTech is targeting the export market. McAuliffe has lined up a Danish distributor and forged a joint-venture partnership in China.

If the enterprise flops, it will tar McAuliffe as a fast-talker with big ideas and poor business judgment whose main gift is talking other people out of their money. He would be the last guy I’d want as governor overseeing Virginia’s economic development projects. On the other hand, if he pulls it off, he will gain enormous credibility as a big thinker and deal maker. Let’s hope that the business prospects for GreenTech will be sufficiently clear by next year that we can make an informed judgment of McAuliffe’s gubernatorial timber.

18 Responses to Terry McAuliffe — Fast Talker or Visionary?

  1. One thing you can be sure about McAuliffe is that he will not support vaginal probes, or investigations into UVA research or recognizing Confederacy “contributions” to the Old Dominion.

    whatever else he might be – he won’t be the Cooch.

    having said that.. he does strike me as a bit of a “talker”.

    Would a partisan right-wing zealot like the Cooch be a better Governor?

    No. He will set Virginia back decades and make us a laughing stock.

  2. There are few in the political arena I hold in lower regard.

  3. I am finding the Richmond – centric pap about Terry McAuliffe to be pretty interesting.

    One missing point from Bacon’s post is Cuccinelli’s bona fides with regard to economic development. Oh, he has none? None at all? Zero? He’s a Republican anti-government regulation zealot who made his money as a business attorney – the epitome of profiting from government regulation.

    Jim also fails to mention any of T-Mac’s prior business ventures.

    How did Federal City National Bank fare, Jim? McAuliffe helped found that bank when he was 27 years old. What was Cuccinelli doing when he was 27 years old? Founding businesses or mindlessly pushing paper through the court system?

    What about American Heritage Homes, Jim? Did McAuliffe buy a struggling construction company, turn it around and sell it to KB Homes or not? How many entrepreneurial ventures has Cuccinelli been involved with? None?

    Now McAuliffe has helped create a car company. Maybe it will succeed and maybe it won’t. That something you folks in Richmond seem to struggle to understand – entrepreneurship. New businesses don’t always work out.

    Who do you want running the economic development apparatus – an entrepreneur or a paper pushing “business attorney”?

    Cuccinelli has no more sense of business than Obama.

    In fact, Cuccinelli is a shrill, partisan, professional lawyer / politician with no practical business experience – just like Obama.

    Spare me this BS, Jim. If the RPV was really worried about economic development they would have put Bolling forward. Cuccinelli is yet another of those insufferable “born to be a politician” types which infest Richmond as long as there are political contributions to be had from the special interests. He has never formed a business or created a single job.

  4. McAuliffe is a crony capitalist. And he lies about transportation funding and building a automobile factory in Virginia.

  5. “McAuliffe is a crony capitalist. And he lies about transportation funding and building a automobile factory in Virginia.”.

    Cuccinelli is a professional politician and second rate lawyer who failed with many of his legal initiatives as Attorney General. He doesn’t understand transportation funding well enough to lie or tell the truth about it and wouldn’t recognize an automobile factory (or any other private enterprise) if one dropped on his head.

    • Are you still complaining about the 20-somethings who cry about traffic? Ignore the little twerps.
      The reason we have traffic problems is because the Fairfax County Board of Supervisors approved so damn much growth it overwhelmed the roads. We are spending billions to finish the Silver Line that will have the impact of degrading service on the Blue Line and the Orange Line west of East Falls Church. My isn’t that pro-business. Pro quality of life.
      What road projects will be built? Fairfax County that is seeking higher local taxes does not know what road projects it wants once those that are funded are created. Source: Tom Biesiadny. Just put more money in the till and trust. More pro-business thinking.
      If we paid more, would we get traffic relief? No, not according to MWCOG. http://washingtonexaminer.com/traffic-woes-likely-to-persist-for-decades-officials-say/article/2514621 But pay more anyway. Fairfax County opposed the legislative effort of Del. LeMunyon & Senator Marsden to require the ranking of transportation projects by reductions in traffic congestion and improvements in safety. That’s good for the quality of life. Pay more to build roads that don’t provide measurable relief.
      The corrupt CTB still wants to fund the Outer Beltway (which was not on the original list of critical transportation corridors and opposed by Loudoun , Fauquier and Clark Counties, as well as the state of Maryland). Supporters claim its to advance the air freight in and out of IAD. But look at the list of supporters. There are no air freight companies on the list of supporters. They’re mainly real estate developers and their agents.
      Transportation funding in Virginia is as crooked as the trash hauling industry in New Jersey. At least McAuliffe will fit in. He is a crony capitalist. And, NO, transportation will not improve unless we also reform the process. Something McAuliffe wouldn’t do.

      • Not sure what 99% of this rant has to do with McAuliffe or Cuccinelli. Here is Cuccinelli’s web site:

        http://www.cuccinelli.com/

        Check the issues tab. No mention of transportation. Or jobs.

        However, there is this under “the constitution and liberty”:

        “Ken was the first Attorney General in the country to file a lawsuit seeking to overturn the federal healthcare law.”.

        He doesn’t have a position on jobs or transportation but he advertises his failed attempts to manipulate the federal government?

        You claim McAuliffe won’t improve the transportation process. You have no basis for that presumption. Did Cuccinelli push to improve the process during his time in the General Assembly? Or, was he too busy with conservative social issues?

        • The Attorney General’s office has no say over transportation policy or economic development policy. I am not surprised to find that the AG’s website does not address either issue. Judge Cuccinelli on what he has to say about those topics on his *campaign* website, when he gets around to putting up one.

  6. geeze, TMT is on a tear here…..

    ;-)

  7. My goodness, what an incredible waste of money and (eventually) time and talent. At first I was impressed with an electric car that got 115 miles to the charge, even if I was set back a bit that it was only a two seater. Then when the bones of the vehicle was revealed that it had a top speed of 45 mph – we have people in America that remake gas and electric golf carts that do MUCH better than that. Yup, this will be a non-starter.

    • “I think there is a world market for about 5 computers”…. Tom Watson, Chairman of IBM, 1958.

      Computers got smaller and cheaper and the world market turned out to be closer to 5 billion than 5.

      If the top speed were 65 mph, would that change your thinking?

      It’s their money – if they want to invest it in this venture, so what?

      What new enterprises does Ken Cuccinelli recommend?

      • If the top speed were 65 … naw, I still woudn’t buy one; not fast enough and I’m still put off by only two seats. Also if the top speed was 65 the charge probably won’t last as far, another flaw that is the bane of electric vehicles.

        However, I totally agree, it IS their money, they can do whatever they want with it. Since Obama wants to take more of it, I’d rather it went to anything, anyone (to some degree) besides him. Oh Groveton, you got me started.

  8. Jim,
    Did McAuliffe or GreenTech ever formally apply for any credits at all from Virginia? Blue Virginia says there was never an application.

    • I don’t know if McAuliffe/GreenTech formally applied or not. Blue Virginia may be right. But, then, I wasn’t bashing McAuliffe for applying for state hand-outs. I agree with Don that it’s his fiduciary duty to get the best deal for his investors that he can.

      Indeed, I wasn’t bashing McAuliffe at all. I was praising VEDP officials for asking good questions and displaying sound judgment.

      Regarding McAuliffe, it’s too early to tell if he’s a visionary and a genius or a flim-flam artist. We’ll just have to see how GreenTech fares.

  9. how about if an electric car got you on the toll lanes solo with no toll?

  10. what would have happened to the nascent birth of the automobile itself if folks had insisted it had to go 65mph and not use renewable fuels?

    :-)

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