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Should Taxpayers Back Cars Only the Rich Can Afford?
theodp writes "The NY Times questions the $400M in low-interest federal loans requested by Tesla Motors as part of the $25B loan package for the auto industry passed by Congress last year. 'The program is intended to encourage automakers to improve fuel efficiency, but should it be used for a purpose like this, as the 2008 Bailout of Very, Very High-Net-Worth Individuals Who Invested in Tesla Motors Act?' Tesla says it is assembling about 15 cars a week and has delivered about 80 of its $109,000 base-price Roadsters to date, many of which have gone to the Valley's billionaires and centimillionaires who are Tesla investors as well as early customers. We discussed the company's financial difficulties last month."
Tesla's request was so they could design and build a much cheaper electric family sedan; i personally believe that it is a good investment even if the car costs 50k.
It seems unlikely that tesla will mass produce a car, but it does seem likely that they will be gobbled up by a larger company that will.
It would be money well spent
Should taxpayers back car makers first of all. Propping up failing industries with cash is like trying to fight gravity by throwing things up in the air. Should productive people pay for the calamitous ruin produced by government backed union thugs? So politicians bought michigan votes and now it's time to pay, only the payers will be the people living in the US. Uh uh.
Should we pay for the cars of the wealthy... ooooooh the wealthy. Yeah right, this is about the wealthy. Wait, no. Actually this is about the fucking Marxists who believe in unions, who believe in a socialized banking system.
Taxpayer should not back anything, and that includes the most bankrupt and morally corrupt company of all, the US government. Who will bail out the US government? Ponder this.
\u262D = \u5350
Plus, the established auto makers research is primarily still into improving ICEs, which is inherently, horribly inefficient. We've had over a hundred years of research and development into improving the ICE and it's still AT BEST only 25% efficient. We don't need any more ICE development, thank you very much.
ICEs aren't horribly inefficient. Something like a 25% efficiency is the maximum possible allowed by thermodynamics. By that standard, the modern automobile engine is quite efficient, especially if driven correctly to maintain it in the optimum efficiency band.
If you used that same gallon of gasoline to power a generator to charge your electric car, you wouldn't get any more efficiency--the opposite, in fact, due to losses in the conversion and storage process for electricity. The main benefit of electric cars is diversity of sources (and being able to take advantage of more efficient generators, which still aren't going to magically beat the limit imposed by the Carnot cycle), not that they're so vastly more energy-efficient than gasoline cars (because holistically, they're not).
Why does it cost Tesla $200 million to bring ONE car to market?
Corrolary: why is the Tesla Roadster 10% heavier than originally designed?
Why does it cost GM billions to survive?
Corrolary: why do cars look increasingly alike?
Answer: government regulations dictating design of everything right down to the armrests, not to mention buttloads of useless safety gear (are cars *really* safer now than 10 years ago?). We've made the barrier to entry way too high that you simply can't have a small automotive startup.
If you really want to spur the industry to life you'd start repealing car design legislation.
The secondary advantage is you'd no longer be dependent on companies "too big to fail".
Tesla is the tip of the iceberg. The big traditional car companies should have made the transition to new technologies and electric cars long time ago. For some reason it did not happen. At the time of handing out taxpayers bailout, would be a perfect occasion to start a congressional hearing to find out why all this did not happen. This would be the perfect time to find out if there were any conspiracies, collusion with the oil industry, killing innovations which could have made difference.
This would be a good time to find out why the car industry did not make the changes which would have avoided to find themselves where they are now. Maybe it's also the time to name names and make changes to legislation that would avoid to get into the same situation and to create a system where people in charge of making critical mistakes for any reason can be charged.
No one gives a damn about efficiency. Sure, given equal performance and convenience, most people will choose the more efficient option, but the performance and convenience damn well better be equal.
The point of bailing out the big 3 is to slow down the rate at which they dissolve, giving the 3 million people that are nearly directly dependent on them for employment more time to find other jobs, retrain or die. The thought is that the ongoing inefficiency is less costly than the other way round.
Nerd rage is the funniest rage.
We should raise the gas taxes.
NO.
As P. J. O'Rourke said, giving money to governments is like giving whiskey and car keys to adolescents. The proper role for taxation is to raise the funds necessary for the government's constitutional powers, not to manipulate the behavior of the public.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Just because the output of an organization is socially desirable, it doesn't mean it's economically sound. What if I started a company to build electric cars for everyone, not just at $100,000, but at a severe lost, should the government subsidize me? Most of the time loans should be made for economically sound reasons. Low interest loans to risky borrowers is dumb and is what got us into our current financial crisis. Yes, housing for everyone is socially desirable but it doesn't make good financial sense.
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The point of bailing out the big 3 is to slow down the rate at which they dissolve, giving the 3 million people that are nearly directly dependent on them for employment more time to find other jobs, retrain or die. The thought is that the ongoing inefficiency is less costly than the other way round.
I can see this argument, but I doubt that's why government is bailing them out. I think it's a combination of wanting to look like they're doing something for constituents and brokering resources for special interests. Personally, I think it's better to just pull the plug. Sure it'll be a bit difficult for the three million people, but collectively they'll be doing more productive work.
If I understand it correctly the $25 billion fund is for advanced technologies not a bailout. It would be hard to argue that Tesla isn't using some rather advanced technologies. And when a technology is new it's expensive, however with enough research and mass production prices drop and the technology becomes a viable alternative.
I find this interesting after there was a story on Digg yesterday about Tesla complaining that the car companies wanted this $25 billion to bail them out rather than use it for what it was intended for. I think it's pretty shifty since this fund was set up last year and in no way was meant to be a bailout.
Here's the link to that story:
http://gas2.org/2008/11/28/tesla-says-money-shouldnt-be-diverted-to-bailout-car-makers/
If you read about fascism from the horse's mouth, you'll see, that there is no difference. Here, I picked the most familiar-sounding items put forth 88 years ago:
Had it not been for Hitler's bizarre obsession with genocide — which, as Franco and Mussolini demonstrated, is not an inalienable part of Fascism — the Left would've considered Hitler as a perfectly respectable source of quotes and inspiration, along with Lenin, Mao, and Karl Marx.
In Soviet Washington the swamp drains you.
The freemarket decided we should be the bitches of OPEC. I disagree with those results and as such, I am more than happy to fund research the freemarket won't.
The freemarket didn't fund the national freeway system. Thank God the government did, else our economic power would never have reached the heights it did.
Who is worthy of this grant if not Tesla ! Jeez. Yes their cars are high end, but they have always stated that they want the technology to trickle down to a domestic consumer car. If it were up to me I'd give them the WHOLE AMOUNT. The Detroit dinosaurs NEED to DIE. They are a symbol of everything that is wrong with the US.
They aren't really zero emission. They are just moving the emissions down the line, which is good in that it gives you more flexibility in how you generate the electricity, but could be extremely bad if you pick the wrong method.
If its coming from hydroelectric, solar, wind or nuclear you might say they are zero emission, though nukes are emitting some fairly nasty radioactive waste out the back end and some pretty nasty waste at the front end to produce the fuel if its coming from enriched uranium.
If the electricity is coming from natural gas is is still most definitely emitting CO2 so its not really the answer to global warming if that's what you are trying to accomplish. Natural gas is a pretty clean fuel so maybe its a net win, but it is releasing a greenhouse gas and its still burning fossil fuel which is eventually going to run out. It would probably be better to use the natural gas we have to make fertilizer and plastics.
If the electricity is coming from coal fired power plants migrating to electric cars is a environmental screwup of epic proportions. So unless you are also ruthlessly preventing building new coal fired power plants and replacing the ones we have with something cleaner, electric cars aren't solving the problem.
The other down side to electric cars is that, unless you are charging them from solar or wind in your back yard, they will require a major expansion in the grid if everyone starts driving them, and that means a lot more really ugly high voltage power line strung across the country.
Urbanites probably don't care because most of the power plants and power lines get inflicted on the people outside the cities.
@de_machina
Just because something is regressive taxation *does not* mean that it's a bad idea. Especially in the case of taxes designed to change economic incentives, the regressiveness of the tax is solidly a secondary concern - and one that can be easily solved by cutting income tax further for the lower brackets.
-- The act of censorship is always worse than whatever is being censored. Always.
Will this R&D make these cars affordable to people in China or India? No. Will R&D make zero emission power plants affordable to China and India? No. Will the cars if, made better and mass produced, have any impact on global emissions? No.
So what exactly is the point of giving money to a company that markets and sells guiltlessness to rich people in rich countries?
Win a signed Stephen Carpenter ESP Guitar from the Deftones: http://def-tag.com/?r=0008781
But Tesla isn't inherently a luxury model. It's only so expensive because the fundamental technology for this kind of car is so expensive, not because they wanted to make a car specifically for the rich market. In that sense, they're really doing what the very first car manufacturers were doing - first make something that generally works, no matter the price; then, develop the technologies to get the price down and expand the target market.
How about this:
Take the money they are requesting and instead use it to fund the foundation of a brand-new, American-based, car manufacturing company. This new company will not only be able to hire all (or at least most of) the workers that the current ones lay off, but it will also re-introduce some competition in the industry (which, incidentally, is the lifeblood of capitalism).
That should both ease the economic crisis and help reduce the negative economic impact of the current auto cartel, while not rewarding the current industry controllers for their demonstrated financial incompetence (thus keeping the taxpayers less pissed off).
Sounds like a win all around, eh?
Ummm.
Toyota pays an average of $30 at it's largest plant, compared with $27 at GM.
reference
If you're not making enough to pay any taxes, you're not making enough to own a car. Yes, the tax funds should go into mass transit.
The Ford Model A was an unsophisticated vehicle except where it counted ---
in that tough, damn near indestructible, little four-cylinder engine.
If there are no trained mechanics outside the major cities, than you build a car that doesn't need a trained mechanic.
A car that can be built on an assembly line without skilled labor.
If the roads are mud, you build for mud.
You don't build for speed.
You need only the simplest of transmissions. You need only the simplest of mechanical brakes.
Ford understood that he could leverage the lack of infrastructure to support the automobile to his advantage.
The Ford Model A and Model T were basic transportation.
They were easily and cheaply "modded" into pick-up trucks, delivery fans, campers - anything you needed. The farm tractor. The stationary engine on wheels. It had everything but a PTO.
The railroads put them on tracks. Rural libraries used them as bookmobiles. The shopkeeper put his grocery or general store on wheels.
One traveling evangelist and his wife built a tiny church on a Ford body, and took to the road with a pump organ and a fold-down steeple.
That I would like to have seen, both for its innocence and its imagination.