SA rejects Ethan's bid for bucks

The South Australian government has rejected a request for “tens of millions in up-front support” from Ethan Automotive, the Melbourne-based start-up which wants to manufacture vehicles in Australia from late 2018.

But despite the setback Ethan insists it remains committed to its plan for local manufacturing after Ford, Holden and Toyota shut down their assembly lines by the end of 2017.

“Ethan’s car program continues on track with a full market assessment completed and benchmarking underway,” a spokesperson said in a written statement issued to motoring.com.au this morning.

Established last year, Ethan Automotive has declared it wants to build an assembly plant in Adelaide’s northern suburbs that would produce up to 30,000 vehicles per annum based on a modular platform, drivetrain and interior sourced from ‘tier one’ suppliers.

Ethan Automotive’s chief operating officer Matthew Newey told motoring.com.au in June, total investment from public and private sources to roll out a three-model range led by an SUV and reach an annual production capacity of 30,000 would be in the range of $1.5 billion.

But after meeting with Ethan last Friday -- along with Victoria’s Industry Minister Lily D’Ambrosio, and the Chair of SA’s Automotive Taskforce, Greg Combet -- the South Australian Minister for Automotive Transformation, Kyam Maher, has backed away from Ethan’s plan.

“The South Australian Government welcomes new ideas that support innovation, economic activity, and job creation,” he said in a statement supplied to motoring.com.au.

“We will continue to talk to Ethan Automotive as the company develops its business model, and we will help and provide advice to Ethan as it conducts a thorough risk and cost benefit analysis of its proposal.

“However, given Ethan had asked the South Australian Government for tens of millions of dollars in up-front support, we don’t believe the state – and taxpayers – should be exposed to such a high level of risk, particularly with a company that has no track record of manufacturing.”

A request to D’Ambrosio’s office for her assessment of the meeting drew an ambivalent reply from a media adviser

“It was a productive meeting between Ministers and we will continue to speak with Ethan Automotive. Any manufacturing proposal we consider will have a strong business case and demonstrate best use of taxpayers’money,” the adviser told motoring.com.au.

Combet did not return motoring.com.au’s calls.

Ethan Automotive is the brainchild of businessmen Ashley Fenn and Peter Harris, neither of whom has worked in the automotive industry. However, Newey is a 20-year veteran, specialising in manufacturing and supplier base. He has been lobbying the South Australian, Victorian and federal governments for assistance with the goal of having significant support tied up before the end of 2015.

Both Ethan’s assembly plant and headquarters were originally being slated for Adelaide, but with the vast bulk of Australian vehicle design and engineering expertise based in Victoria, Melbourne is a possible HQ and development centre for the company.

Ethan has vowed in its statement to keep negotiating with the South Australian Labour government.

"Ethan Automotive remains committed to building cars in Australia and are continuing to work with our supply chain partners to achieve this."

"We understand that the South Australian Government needs to assess all business cases and economic opportunities based on their capacity to create jobs and real economic value to the state and in particular, Adelaide’s northern suburbs."

"Ethan Automotive look forward to continuing discussions with the South Australian Government on how we can contribute to the Northern Economic Plan.”

The Northern Economic Plan is an SA government initiative designed to combat the impact the closure of Holden’s Elizabeth plant will have on the region.

Ethan has not only been seeking funding and guarantees, it has also been in negotiation with the federal department of industry and science to gain status as motor vehicle producer under the Automotive Transformation Scheme. That status is essential if tier one suppliers crucial to Ethan’s plan for vehicle development are going to be able to access the ATS for R&D and plant credits beyond 2017.

“The minister and office are aware of the application but it remains a matter between the company and the department,” a spokesperson for industry minister Ian Macfarlane said.

“Discussions are ongoing and a recommendation is expected to the minister by the department in the coming months,” the departmental spokesperson stated.

More on Ethan Automotive:
SUV the priority
Confident of success

Pollies behind start-up
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