McAuliffe's GreenTech Sought Chinese Government Subsidies as Recently as March
A $60 million Private Placement Memorandum dated March 2013 circulated by GreenTech Automotive, which Terry McAuliffe served as chairman from 2010 to 2012 and continues to serve as chairman emeritus, shows that the company saw huge financial opportunities in potential Chinese government subsidies for its electric vehicle business as recently as six months ago. There is no indication that the company's views on the benefits it might receive, directly or indirectly, from the Chinese government have changed.
The prospectus states that GreenTech Automotive "is currently exploring opportunities to partner with a Chinese partner to manufacture and sell MyCar, MyCar EV and other electric vehicles and automotive parts in China ('China Joint Venture'). . .The China Joint Venture will aim to take advantage of the numerous incentives provided by China to develop, manufacture and sell electric vehicles."
According to the document, "[i]n such joint venture arrangement, [GreenTech Automotive] would provide technology and know-how to manufacture electric vehicles and the Chinese joint venture partner would contribute a manufacturing facility."
The prospectus is quite enthusiastic about the potential for subsidies for the company from the Chinese government, which, it says "views the development of electric vehicles as a key component of China’s industrial development and has already implemented policies to speed up the development of the electric vehicle market and make electric vehicles more attractive to consumers in China."
For GreenTech Automotive, these policies could translate into increased revenue through direct consumer subsidies."Under a national incentive program," the prospectus reads, "consumers may receive a subsidy of up to 60,000 RMBs [the equivalent of $10,000] for each electric vehicle purchased."
Significantly, the Chinese government also provides direct subsidies to electric vehicle manufacturers. The prospectus lists "programs being implemented in China that will assist the sales, development and manufacturing of electric vehicles," which include the State Council's Development Plan, provincial and local electric vehicle incentive programs, and the Ministry of Science and Technology’s 12th Five Year Plan.
Under the State Council's Energy-Saving and New Energy Vehicles 2012 Development Plan, the 'State Council Directive' "calls for substantial investment in China’s electric vehicle market and considers 'pure electric vehicles' as a top priority for national investment."
What is particular striking in the language of the prospectus is the glowing terms used to describe one of the Chinese government's "Five Year Plans." The term "Five Year Plan," first used to describe the economic planning of the Stalin regime in the Communist run Soviet Union and the Mao Tse-Tung reign in Communist run China, is synonymous with an economic system characterized by miserable failure.
But the GreenTech Automotive prospectus is delighted with the Ministry of Science and Technology's 12th Five Year Plan for the years 2011 to 2015, which "allocates a 100 billion RMB [$16 billion] investment to make China the largest market for electric vehicles in the world with targets of one million energy efficient vehicles by 2015 and five million by 2020."
The Five Year Plan "not only includes investments in electric vehicles, but the whole chain of their production and use. Since the . . . Plan’s implementation in 2011, the [Ministry of Science and Technology] has invested 780 million RMBs [$130 million] into an electric vehicle fund allocated to 77 projects."
The prospectus makes no mention of a highly touted 2011 joint venture between GreenTech Automotive and Shengyang ZhongRui Investment Co, which stalled because funding from the Chinese government "dried up," according to a GreenTech Automotive executive. It seems evident from the document, however, that GreenTech Automotive remains hopeful that the Chinese government's Ministry of Science and Technology will invest large amounts, the equivalent of possibly tens of millions in American dollars, in the future with one of its potential Chinese joint venture partners.
Image: GreenTech Automotive