Wednesday, August 10, 2016

Green Tech Automotive Misses First Loan Payment

Tiny Green Tech Automotive, located in Tunica, Mississippi, is an electric car startup that has Elon Musk-type expectations. It once said it plans to sell 250,000 of its diminutive battery operated cars a year. The state of Mississippi, desperate for good paying jobs, loaned the company $3,000,000 to get its business started. On June 30, the company missed the first loan payment of $150,000. It’s not good news when the very first payment is missed.
Green Tech Automotive
Mississippi Development Authority spokesman Jeff Rent confirmed on Monday that the Tunica County company missed its first loan payment. “The Mississippi Development Authority continues to work with GreenTech Automotive as the company secures additional funding,” Rent wrote in an email. “This is the best course of action to protect the state’s investment and to keep Mississippians working at the plant.”
Part of the problem can be traced to federal immigration policies. Green Tech was planning to take advantage of a provision that allows non-US citizens to obtain a permanent green card if they invest $500,000 and create 10 jobs. In May, the Roanoke Times reported that the U.S. Citizenship and Immigration Services had denied a green card request. Nicholas Colucci, chief of the immigrant investor program, signed a decision stating GreenTech had a “general lack of credibility from the failure to meet any projected timelines.”
Despite Green Tech’s promise that it would have 350 employees, the INS found it actually had only 75 people working for it last year, has produced only 25 cars, and has sold none. Hardly an enviable record for a company that has promised the state of Mississippi it would invest $2 billion in the impoverished Delta region.
Rent said he doesn’t know if Mississippi has sent GreenTech a default notice. Under the loan agreement that Mississippi signed with GreenTech in 2011, a default notice would allow the state to declare the loan due and payable immediately. That could lead to a seizure of all Green Tech’s property and assets.
Besides the $3 million loan, Mississippi also loaned Tunica County $1.9 million to buy the site for GreenTech. The company has also been certified for state tax breaks exempting it from state income and franchise taxes for 10 years, and from sales taxes on equipment.
There is more than a whiff of political intrigue behind Green Tech’s financial dealings. Virginia’s Democratic governor, Terry McAuliffe, was the chairman of Green Tech when it was formed. He says he resigned that post in 2012. However, CNN reported last month that McAuliffe is under investigation for possible campaign donation irregularities.
The investigation involves a payment of $120,000 made by Chinese businessman Wang Wenliang through his U.S. businesses. Wang was previously a delegate to China’s National People’s Congress. Campaign donations from foreign nationals are illegal but permitted from those with permanent resident status. How Wang obtained his green card is unknown.
As for the car Green Tech plans to build, little is known. It is tiny, about the size of a Smart fortwo. Whether it is a car buyers are clamoring for remains to be seen — assuming any ever get built. The Green Tech story is the norm for automotive start ups. Not everyone has a leader like Elon Musk at the helm to guide a new venture through the rocky shoals that await all new businesses.
Source: St. Louis Post Dispatch    Photo credit: Green Tech Automotive

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