U.S.-China car startup raises $24M from big wigs

Henry Paulson – remember him? – is one of a few well-known investors in a company that wants to fashion a Chinese car for the U.S. market
 
Henry Paulson's new prescription for economic growth for the U.S.? Invest in Chinese know-how.

Coda Automotive – which wants to sell an all-electric sedan in the U.S. next year – has lined up $24 million in a second round of funding and, to a certain degree, it's an unusual group of investors.

The group includes Paulson – the former Goldman Sachs titan who became a familiar face to most Americans when the economy collapsed during his tenure as U.S. Treasury Secretary last year – as well as Thomas "Mack" McLarty, the former chief of staff for Bill Clinton, Tom Steyer, a noted energy investor and one of the large donors to Stanford's Precourt Institute for Energy Efficiency, and former Edison International CEO John Bryson. The VC firm Angeleno Group and company insiders also invested.

Coda was spun out of Miles Automotive earlier this year. Miles specializes in low-speed electric cars for military bases and college campuses.

By contrast, Coda will make an all-electric, freeway legal car that will sell for around $45,000 (before $7,500 in federal tax credits). Coda wants to sell it to consumers in 2010. That's more expensive than the GM Volt or Nissan electric cars, but not outrageously more – GM's Volt is slated to come out at around $40,000.

So how will a small company pull that off?

Coda's car is based around a gas-burning car already produced in China by state-owned Hafei. Engineers at Hafei and Coda will tweak and test it to bring it up to western driving and safety standards, but using an existing car, ideally, will help cut engineering and testing costs and time. Partnering with Hafei, which makes 200,000 cars a year, also means that Coda won't have to build a factory.