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Thursday, August 5, 2010

Electric Car Firm Pulls The Plug

Barry Bernsten, a Philadelphia-based steel wholesaler, launched his electric car company BG ("Be Green") Automotive Group with high hopes in 2008. The time had come, he said, to take the energy crisis seriously, and the domestic auto industry remained addicted to the high profit margins in large trucks and SUVs--even as the public was saying no to them in droves.

Bernsten's mission: bringing "reliable, safe, and affordable electric vehicles to the North American consumer." The route of "three-wheeled vehicles that look like moon rovers" or high-performance $100,000 sports cars was not for him either-- he wanted to take low-priced Chinese cars and electrify them.

But BG was a non-starter, and the reasons why make a cautionary tale. "I am exhausted and throwing in the towel," Bernsten said. "I'm going back to selling steel."

For his steel business, Bernsten is a frequent visitor to China (both as a buyer and a seller), and several years ago he got approached about importing gas-powered Chinese cars to the U.S. "I visited six plants, and though I saw some where the paint was peeling off the plastic bumpers, and the wheels and hubcaps were rusting, one of them made high-quality automobiles," he told me. "In fact, its cars were better built than many U.S. and Japanese cars on the market now."

Working with that gasoline vehicle as the base, Bernsten developed the BG-C100 electric car. Like the forthcoming Coda sedan and the Wheego Whip Life, the car used a Chinese body but incorporated many Western safety and engineering refinements, including the complete electric drivetrain. Still, if Coda and Wheego are guides, BG could have brought a credible battery car to market in North America for $30,000 or so.

The big hurdle is getting a factory up and running, and for that Bernsten--and every other electric vehicle maker--asked for up to $150 million in federal Department of Energy (DOE) funds. He didn't get it. Hundreds of millions of dollars did flow, but the recipients were, in addition to such established players as Ford and Nissan, Tesla Motors (maker of the celebrated $109,000 Roadster and the coming Model S sedan) and Fisker Automotive (another high-performance car, the Karma plug-in hybrid, plus the more affordable Nina). Tesla got $465 million, and Fisker $528 million.

"The well-connected guys with the lobbying teams got the loan guarantees," Bernsten said. "I'm not disillusioned with the Chinese, I'm disillusioned with the DOE and their evaluation process. I'm frustrated that we couldn't even get partial funding."

State and local governments were eager for Bernsten to locate what he envisioned were as many as six plants in their regions, and they offered available land, and generous tax incentives. But that's also true of many other companies, including Coda, that have applied unsuccessfully for DOE loans and lined up U.S. factories. (Coda is looking at Ohio, where the state government did everything but promise the company wouldn't have to pay its workers.)

Coda is going ahead without government money, but BG is over and done, and Bernsten says he wants to donate his one prototype to a Philadelphia museum. When electric cars rule the land, maybe we can all visit the museum and think about the electric vehicle revolution that had winners, and losers too.

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Unknown said...

This is a cautionary tale. Not every electric car will be a winner. Some like BG may not make it to production. Some may even be scams. But there are winners like the Tesla and there are some with potential waiting for investment.

Anonymous said...

Now I might not know much, but when I see giants like Toyota and Honda jumping head first into the game, we know the electric car has a future, but don't take it from me! Here's a pretty engaging article I got a hold of today that I believe will complement your research quite nicely:

So if you have a minute, this one's not a bad read :)

Daniel Fenton said...

Are you saying CODA's DOE loan app was rejected. Do you have a source for this?

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