Tesla has taken a $350 million loan from the U.S. government -- that's more than a million bucks from Uncle Sam for every car they have ever sold. The taxpayer gets absolutely no upside on the deal, except the hope that we get our money back, but the millionaire equity owners and the foreign automaker Daimler get unlimited upside. It is another "heads we win, tails you lose" deal from Congress and their cronies.
As a single 26 year old with no house about 30 percent of my salary is deducted for government expenditures.
Given I have little choice in how that money is spent on a large scale at the federal level (beyond voting for my senate, presidential, and house representatives). I am happy that least some of it is going to help develop a new technology that has needed more support and could have a large positive impact. Even if the chances of success aren't definite, at least they have a working product.
While listening to my fellow colleagues and friends reflect on how much is spent on hourly rates for defense contractors here in washington dc that have very little working product I don't feel as bad.
Although, I agree that it can be a negative as we are investing a company with foreign interest and already wealthy private equity holders. To resolve your issue more stipulations could have been made for Tesla in order to grant them the money so that the public can somehow have a more assured return on investment.
I don't necessarily disagree with your assessment of our Congress, but at the same time, surely there is more to be gained here than simply getting our money back. Isn't the potential for technological advancement worthwhile? Even if they never release a truly inexpensive mainstream electric car, the odds are good that they will produce technology which can be improved upon by others, and in that case, we do come out ahead, if not financially, then socially.
There is a lot of things the government spends money on that I feel are completely stupid. Since we live in a democracy, the spending decisions are made jointly through the democratic process utilizing elected leaders, etc., and it is very unlikely any one person is going to agree with every spending decision.
That said, guaranteeing a loan to Tesla is about the best thing I can imagine taxpayer funds being used for. They are shipping electric cars now that people are raving about, and expect to be cash flow positive soon.
Electric and hybrid propulsion is the future, and if we can get their faster with some loan guarantees, why not?
the least they can do is use that money to make an affordalbe electric car for people. Something with a $25K price tag.
It's not like it is impossible to do.
Tesla S is $50K...you can probably slash 5-10K by having them use a smaller base vehicle, instead of the Jaguar XF.
Smaller base vehicle means you need less batteries. The S weighs 4,000 lbs. so by using something the size of a Civic for the base vehicle, you can probably slash the weight down to 2,500 lbs. Which means you can probably get away with using 4,000 battery cells instead of 8,000. So if they pay $5 per battery cell that's another $20K saved.
Maybe Tesla should have done a mass-market product, or maybe not, but your argument is exceptionally weak.
Iff you're right, and Tesla could get their unit cost down to $25k (a final BMW sticker price, FWIW), they'd still be left with the challenge of bringing a mass-market product to market. They'd have to build a sales and delivery channel, create a supply chain that could sustain the volumes required to run a lower-margin business, and, after all that, be competing in a segment that services value-conscious buyers, many of whom are already confused about the difference between hybrid and PEV.
That's iff you're right. But you probably aren't. Because you're swagging materials costs out of thin air when talking about a product that went from $140k in materials alone to $80k in a span of months. That was apparently a harrowing crisis for a product with a six-figure sticker. For a car that would go up against a BMW 3-Series, they'd have no such margin of error.
In the end, you have to ask yourself what the world should be getting from Tesla. If it's technology, then who cares who they sell it to first? Why would you ask them to pursue a business model that increases the chances that they'll go out of business before they ship rev2, rev3, and rev4? Why does the final product even need Tesla's badge on it? Maybe, like many other luxury manufacturers, Tesla's badge will always be prohibitively expensive, but their components will OEM to much more cost-effective platforms from Daimler.
How many taxpayers would approve of giving taxpayer money to subsidize $100,000 toys for a bunch of rich guys? The least we should get is some technology in exchange. Or at least an affordable option for the general population that's footing Tesla's bills.
Technology is nice and all, but someone always has to foot the bill. If it's the taxpayers they should at least get something in return.
Should the government give money to Tesla under any circumstances? I don't know. But if they're going to give them a loan, I hope Tesla pursues a business plan that keeps them operating long enough to pay it back. Tesla simply has a more effective go-to-market plan on high-end vehicles than they do with a mass-market product they're not equipped to deliver.
That's orthogonal to the point this thread is discussing, which is whether it would have been better for Tesla to pursue a lower-end vehicle. It seems obvious that it wouldn't have been, since PEV's are an unproven early-adopter product, and since the mainstream auto manufacturers have something like a half century of sales and delivery infrastructure over Tesla.
It is downright goofy that you'd get curmudgeonly about this deal but never have anything to say about Raytheon, Boeing, Texton, General Dynamics, or Lockheed Martin. Welcome, I guess I mean to say, to America.
Impressive! And kudos to Elon for coming out in the public to talk about this, even though he didn't need to. Read it start to finish. It's well written, well cited, stays professional and doesn't make personal attacks.
If it's true, I have no sympathy for the former CEO, as he really screwed things up. Tesla seems to be in better hands with Musk, who I've always admired personally (which could make me biased, but reading this has confirmed by feeling about it).
EDIT: I don't think of myself as too biased. I admire Musk, but Martin Eberhard graduated from Illinois, which is where I go to school. I would see both as innovators, but Martin seems to have stepped way out of line on this one. There is a huge rivalry with UPenn, so I can't claim too much admiration towards Musk ;)
Agreed. It's interesting to compare the tenor of Musk's post with Eberhard's posts on his blog http://www.teslafounders.com
which IMHO are didactic and often petty.
"To save legal fees, we just copied the SpaceX articles of incorporation"
What?! Such fees must be, at most, a few thousand dollars; it seems really weird that someone worth what Musk is would do this just to save (what is for him) pocket change.
When Musk was interviewed in Wharton's podcast, one of the key points he pushed was the ability of a startup to keep burn rate low. It appears that his philosophy on spending is genuine, and not just lip service, which I find pretty refreshing.
Disagree. I think he wrote this and stayed professional. He was very understanding of Martin's situation, he never made personal attacks, and stayed factual.
