John Bryson, President Barack Obama’s nominee for commerce secretary, may be best known as co-founder of the radical activist group Natural Resources Defense Council and as CEO of Edison International, parent company of giant electric utility Southern California Edison. But one of his biggest obstacles to Senate confirmation may be his relationship with troubled Chinese-backed electric car company Coda Automotive.
Bryson has been a vocal advocate for Coda since 2008. He sits on the firm’s board of directors and is reportedly an investor, and he is an evangelist for the company. Bryson has said: “This is the only board I actually enjoy since I’ve left Edison.” In March of last year at the University of Berkeley Energy Symposium, he singled out Coda by name as an inspiring model for a new technology company.
Many automobile analysts have asked if Coda’s car will be an American or Chinese car. While Coda executives say it will be an American vehicle, the company has forged deep relations with Chinese federal authorities, Chinese state banks, and state-owned manufacturing companies.
This association is at odds with the mission of the American secretary of commerce. His role is to build American companies that can compete with foreign competition, not to send jobs overseas.
Bryson is not shy about Coda being heavily underwritten by the Chinese government, to the tune of $500 million. This is more than twice the U.S. private investment, reportedly $201 million. He told the audience at Berkeley:
[Coda is] working with the advanced battery development arm of the Chinese federal government [and] they’ve contributed in a big way.
Despite many glowing Bryson predictions of success, Coda has been plagued by numerous problems. Over the last four years it has delayed the launch of its all-electric car at least three times, and with at least three different models. It is now tentatively scheduled for Fall 2011. Last November, the company’s charismatic CEO abruptly resigned. It’s vice president for global sales also has resigned. The company has privately raised only $76 million of a promised $125 million.
Coda aggressively sought a piece of a $2.4 billion federal stimulus grant, but so far has not been awarded it. It has courted the U.S. Department of Energy for low-interest loans, and hopes for as much as $400 million, but it has yet to seal that deal.
And many auto analysts gasp at the car’s price tag of $45,000, more expensive than the Nissan Leaf and the Chevy Volt.
Coda’s bumpy road may not play well for Bryson’s candidacy, as he has linked himself to the firm’s fortunes. He personally sat in on private VC fundraising sessions, and reportedly is an investor in the company as well. The company asserts that it will have 50,000 all-electric cars on the road by 2015, though it has yet to produce a single vehicle and auto analysts are skeptical of the claims. The company is betting that California state and federal subsidies will reduce the price tag by $12,500 for consumers (it will only be available in Hawaii and California).
President Obama said of Bryson:
John will be an important part of my economic team, working with the business community, fostering growth, and helping open up new markets abroad to promote jobs and opportunities here at home.
So far Coda has employed countless Chinese and is financially beholden to Chinese government interests. And as a harbinger of things to come for the company, the company’s new CEO comes directly from GM Shanghai and Shanghai Automotive Industries Corp., one of China’s biggest domestic automakers.
Coda also has filled its board with many political figures in the hope that it can secure U.S. federal and state subsidies — which it has not been able to do in the private sector.
Bryson has hailed Coda as the model for an American startup. But almost from the start Kevin Czinger, its wunderkind CEO (he is credited with enticing former Treasury Secretary Hank Paulson and John Bryson to invest unspecified sums) began courting China. Coda cemented an alliance with Chinese automaker Hafei Automotive to produce the car, and Tianjin-based Lishen Battery to produce its battery. China’s government and Chinese banks agreed to support Lio Energy Systems, the joint venture between Coda Automotive and Lishen.
Lishen has been a model for the environmental activists who support clean energy alternatives. In Tianjin in October 2010, Bryson’s former colleagues at the Natural Resources Defense Council held an official event with the Tianjin Conference of the United Nations Framework Convention on Climate Change (UNFCCC). The conference praised China’s leadership in reducing carbon emissions.
Lishen’s ownership also might anger environmentalists who despise Big Oil: a Coda press release says one of the company’s stated goals “is working to reduce dependence on oil” — but Lishen’s major investors are the China National Offshore Oil Company (CNOOC) and the Tianjin Jinneng Investment Company. Lishen has agreed to invest $100 million into the Coda venture. Another commitment of a $294 million line of credit came from the Bank of Tianjin Joint-Stock Co.
As of this writing, it is unclear how many low-paying Chinese employees are used by Coda at the Lishen and Haifei plants, although a similar battery manufacturing facility planned for Columbus, Ohio, is said to employ 1,000 workers — the same number they say work at Lishen. Lishen’s web site is not transparent: its president in 2006 wrote a sunny report claiming “our pursuit is to build Lishen into a big family with harmony, happiness, initiative and diligence for the community.” This might give pause to American union leaders employed at American automotive plants.
Jake Schmidt, a blogger for NRDC, had been given a personal tour of the Lishen plant. His glowing report from the field gave no figures on the number of employees, working conditions, or pay scale. He did say “we weren’t allowed to take pictures of the plant.”
Coda has announced plans to build an American plant identical to Lishen in Columbus, Ohio. But the finalization of the program has been delayed because Coda is also negotiating with the state of Ohio for an “incentive package.” And the company’s estimate of 1,000 employees and 50,000 cars has been met with skepticism among many financial analysts in Ohio. “Those numbers do sound high,” said Mike Omotoso, automotive powertrain analyst for J.D. Power and Associates. “There seem to be a lot of companies with very optimistic projections for electric-vehicle demand.”
Last November when Kevin Czinger abruptly resigned as CEO, no explanation was given for the departure. His replacement is Phil Murtaugh, former head of GM Shanghai and Shanghai Automotive Industries Corps: if Coda intends mainly to manufacture cars in the United States, analysts ask, why pick a new CEO whose experience is in car production in Asia?
Also troubling is the company’s unreliable forecasts for the actual introduction of the car into the United States. In 2008 the company promised the Javalon XS500, which was going to be manufactured in mainland China. It never happened. In 2009, it promised the Miles XS500. It didn’t happen. Then in 2010 we were supposed to see the Coda Automotive Sedan. That has now been delayed until November 2011.
A former Commerce Department official said the Senate Commerce Committee, which reviews the Bryson nomination, would have a field day with his relationship with Coda:
Boy, I would ask, how would you reconcile your private life service with this company with your new position as secretary of commerce?