Ethan seeks taxpayer dollars

New Australian start-up car company Ethan Automotive is in Adelaide today and Canberra tomorrow pitching the case to government for taxpayer backing for its plan to build vehicles locally after the exit of Ford, Holden and Toyota.

The company's business plans revolve around building a medium SUV, a sedan and sports coupe off the same platform from late 2018 at a new plant in the Adelaide suburb of Edinburgh Parks with an annual production capacity around 30,000.

As reported yesterday, when and if the cars do make it to production they won't be branded Ethan, but will adopt either a retired globally-known name or a new name.

The business case developed by Ethan – a spin-off of the Ethan property developments group – forecasts a total investment of $1.5 billion would be needed to get the company up and sustainable.

Newly appointed Ethan Automotive chief operating officer Matthew Newey told motoring.com.au that total would eventually come from a combination of public funding and private equity investment, but he said the support of government would be crucial to a successful start-up.

"If the business case stacks up with respect to volume and pricing then there is a good business there," Newey said. "But it is going to take a lot of investment up-front.

"It is a start-up. We are looking for support from the government for start-up funding."

Newey said it would be crucial to get government onboard within months if Ethan was going to stick to its production timetable and launch to the public before the end of 2018.

"We need to resolve state and federal funding support for the project this year," he confirmed.

"I don't think there will be resolution [at this week's meetings]. For me it's about keeping up engagement with the state and federal governments, to give them access to the numbers we are working through and to view the business case.

"This is about giving them confidence in the business so that either state or federal government can get to the point where they can go 'we are now a believer or a supporter of this and this is how we can help from a financial perspective'."

Tuesday's meeting is with the South Australian department of premier and cabinet to review the proposed business case. The SA government is showing particular interest in the proposal because of the impact the closure of Holden's Elizabeth plant in late 2017 will have on the state's economy.

"I am hoping that by exposing and being open with respect to the business case and showing there is a significant business and significant value to South Australia that should then facilitate a conversation around funding and gaining access to that funding and the timing of that funding."

The meeting on Wednesday in Canberra is with the federal department of industry, which has invited Ethan to apply for Motor Vehicle Producer status within the Automotive Transformation Scheme (ATS) structure.

While that would open up some funding to Ethan, it is also campaigning to have the ATS extended beyond the end of 2017 to enable its suppliers to claim research and development benefits of up to 50 cents in the dollar back for work they do on its behalf.

"At the end of 2017 as the legislation stands today there won't be a motor vehicle producer in the country and therefore everyone's claims within ATS stops," explained Newey.

"So what we need to do is we need to qualify as an MVP and what that does is then allow access for those first tier suppliers to continue to claim post 2017 because there will be a vehicle producer in this country.

"We have some hurdles to get over with the federal government; how many vehicles are we going to produce? Can they give us MVP status on national interest based on the number of jobs they think we can bring in to South Australia or the wider economy?

"That is a discussion I need to have with the federal government on Wednesday."

Newey said he hoped the Abbott government would provide support despites its cutting of support to the multi-nationals Ford, Holden and Toyota that all pull out by the end of 2017.

"We would like to think the federal government would support this project," he said. "We would like to think a Liberal government would be interested in jobs in this country and we think we will bring a significant number of jobs via Ethan and the multiplier effect via different businesses that we think will support us.

"There is a significant number of heads – upwards of 6000 jobs created directly or indirectly by the Ethan business over the long term."

Picture courtesy of Ben McCarthy/Wikimedia Commons