PhillyDeals: Entrepreneur gives up quest to assemble electric cars

Center City-based steel wholesaler Barry D. Bernsten has given up his quest to assemble cheap electric cars in or near Philadelphia.

It has been 18 months since Bernsten drove me around Society Hill in his prototype BG-C100 all-electric plug-and-go car for the masses, made of a welded car body manufactured in China or Vietnam and fitted with U.S. batteries and drive train, with an 80-mile daily range (more if you're skinny) off a few hours' charge.

Bernsten Automotive Group Ltd. priced cars to move for urban drivers at under $16,000. Bernsten estimated the operating cost at 2 cents a mile, batteries included.

Now he's given up. "I am exhausted and throwing in the towel," Bernsten told me Tuesday. "Let China control the affordable electric-vehicle market. I'm going back to selling steel."

How come electric carmakers need government money? In the boom years, Bernsten was able to raise hundreds of millions for private metalworks in Eastern Europe. But today's wary investors mostly "want to see state or federal support," he told me. Billionaire Warren Buffett is investing in car-battery developer BYD - which is based in China. Unlike banks and most private-equity funds, "Buffett can afford to gamble. I'm sure it will pay off," Bernsten said.

What is our government doing? The Energy Department is lending a half-billion dollars each to high-priced electric sports and performance car developers, Tesla Motors and Fisker Automotive, plus billions more for Ford and Nissan to cut vehicle weights and test advanced hybrids. Other taxpayer-subsidized automakers are preparing cars like the mid-priced Chevy Volt for the market as early as next year.

Bernsten had applied for up to $150 million in loans to finance six plants that would stamp out thousands of vehicles in the niche above cheap imported vehicles by installing U.S. operating parts with American labor.

He met with low-level state officials in Pennsylvania, and with the governors of Delaware and Rhode Island, which he said offered "tax incentives, abatements, land" in hopes of landing hundreds of BG assembly jobs.

But the big-money Department of Energy demanded "performance tests that cost many millions," plus extensive environmental tests on the modern warehouse sites selected for Bernsten by the Philadelphia office of Grubb & Ellis. A DOE spokeswoman had no comment on BG.

Bernsten expects the federally backed U.S. plants will sell a modest number of cars to well-off buyers - while cheap foreign manufacturers overwhelm the mass market.

He calls Fisker's and Tesla's bosses "high-tech dreamers" whose popularity with the Obama administration owes something to "lobbying efforts we cannot afford." (Says Fisker's former Philadelphia publicist, David Neff: "He had the knowledge, he had the entrepreneurial experience, he had the drive, he had the product, and he paid all his bills. What he needed was a lot of lobbyists, and the political connections" to shake big money loose.)

Bernsten's offering to donate his prototype to the Franklin Institute or another museum. "Maybe [Energy Secretary] Steve Chu and President Obama can see the exhibit during their next visit to Philadelphia," Bernsten told me. "Call the exhibit 'What Could Have Been.' "

On the west bank of the Schuylkill, planned construction reaches beyond the University of Pennsylvania-Children's Hospital medical complex.

Penn's law school is preparing a $30-million, 40,000-square-foot Kennedy & Violich-designed three-story building to connect the 110-year-old brick landmark now called Silverman Hall with Tanenbaum Hall.

Three blocks south, the Wistar Institute, the historic, independent anatomy-gene-vaccine-and-cancer research institute surrounded by Penn, is planning to knock down a 1970s-era section of its campus at 3600 Spruce and build a new seven-story, 94,000-square-foot research building. No price tag yet for the plan, which leaves the older terra-cotta-and-brick facade intact, Wistar spokeswoman Staci Vernick Goldberg told me.