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Tesla CEO Says Gov't Loan Is 99% Sure and Deserved
N!NJA writes "Two major themes of our time — the desire to achieve energy independence and the furor over public bailouts — have collided in the drama surrounding swanky electric carmaker Tesla. Late last year, a New York Times column whipped Silicon Valley innovators and bailout-weary taxpayers into a frenzy. Valley professor and writer Randall Stross wrote that Tesla was hoping for government money to produce its cars, which only the very wealthy could afford. It wasn't exactly true, since the loan was intended to produce the $50,000 Model S sedan, not the $109,000 Roadster. Still, Stross called it a risky, waste of taxpayer money that would only benefit the wealthy and bailout VCs who'd sunk money into the money-losing company. Never mind, Tesla has developed two cars on less than $200 million — compared to the $1 billion General Motors spent developing the now-deceased EV1."
I've fallen off your lawn, and I can't get up.
Does anyone else think that $50,000 is a hell of a lot of money to pay for a car? Far as I'm concerned Telsa cars are just toys for rich people.
(Yes, I know you get it. I'm replying to your comment to back you up, not to hassle you.)
Stross called it a risky, waste of taxpayer money that would only benefit the wealthy and bailout VCs who'd sunk money into the money-losing company.
Tesla's business plan has always been to work their way down to an affordable car. They can only accomplish this by building some expensive ones first, because they don't have an outlet for large numbers of cars nor income from other lines to pay for the sunk costs of development.
If anything, we need to eliminate all subsidies and allow the major automakers to fail. Then we carve them up into smaller automakers, pat them on the back, and set them loose. This keeps them in business and in theory encourages innovation. GM is simply a balkanized tool of the status quo and it's incapable of turning a corner. The same is true of all of the major American and Japanese automakers. But if we are going to continue handing out money to failing automotive business models, we should certainly give some to Tesla motors in the hope that they can not fail to execute their business plan and after the luxury model, bring us a relatively affordable family car with a useful range.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
The trouble is, there isn't.
The trouble is, all those investors just lost their shirts in "sure bets". They haven't got the cash to spend investing in a maybe, and if you came to them with a "sure bet" they're not going to let themselves get bit again.
The thing is, alternative energy DOES have a long way to go.
I was a big fan of the Tesla until Top Gear's review. It seemed like the perfect electric car: it can smoke most internal combustion cars off the line, AND it can run for more than 200 miles on a single charge. Plus, there are the benefits of less emissions due to economies of scale and a cheaper running cost. But Top Gear pointed out that once you deplete the battery, you have to charge it all night before you can use it again (I think the exact time was 14 hours).
So, awesome, I can go for a Sunday drive in a fun car and feel good about it. Except that I only have a few hours for this drive (if I'm driving cautiously), and once I'm done, I'm done for the day. So it's one step forward, but two steps back. The car doesn't adapt to us, we have to adapt to it. This isn't right, the next alternative fuel needs to fit our lifestyles or people are unlikely to change for it. That's why we need something that can be refueled quickly, which the Tesla certainly is not.
Yep, no longer do you have to be "very wealthy" to afford a Tesla automobile. They're charitably reaching out to the under-served "rather wealthy" with their $50,000 Model S. Why, that's only about 5 years' rent for me -- a perfect starter car for the less-fortunate members of your country club.
Everyone complains about how capitalism is the downfall of our society and look at all the millions the CEOs are making, and all the money the Automakers are getting. Guess what folks. THIS ISN'T CAPITALISM.
Capitalism would let ALL of these companies fail. If you can't make a product that people want or need at an affordable price, then it's a product that should NOT BE MADE. If you are stupid enough to give a $300k loan to someone who makes $15/hour you should not be bailed out. If the goverment "TELLS YOU TO DO IT" then sorry, maybe you got the short end of the stick, but it's still no longer capitalism.
Do not meddle in the affairs of sysadmins, for they are subtle, and quick to anger.
It's a LOAN, not a bailout. You have to pay back loans.
The government is "giving" them the difference between the market interest rate, and the one the government would give them. If the market rate is 10%, and the government gives them the loan at 4%, the government is giving them the 6% difference as a handout. That's the equivalent of writing Tesla a check. It's a bailout.
... and that's when the C.H.U.D.'s came at me.
Uhh, the Roadster is built on a Lotus Elise body and frame. If you are looking at a $50+k road hugging high performance vehicle full of win and awesome, the Lotus Esprit screams it at 8000 RPMs. It is a sexy looking beast that will bruise your kidneys with it's exceptionally stiff and race worthy suspension. To call it an ugly car is purely delusional. It is functional. Exceptionally so. To the extent that the pureness of it's function becomes its beauty.
I'm pretty sure that of the entire market of vehicles on the market today, only a tiny portion of them can be viewed as at all resembling the vehicles from Lotus.
And the new sedan is much more in line with upper market full sized sedan styling. If you don't like it either, wait another 5 years, Tesla will either be unveiling more lines with more traditional appearances, or they will get bought out by a larger manufacturer that will rebuild the modern sedan using their technology.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
Sorry, the charger issue is fixed by trickle-charging not just your car overnight, but also a high-current, high-capacity battery pack in the garage (li-poly? NiMH? Lithium-iron-phosphate? Lithium-magnesium phosphate? Silver-zinc? Lead-acid? Anything but lithium-cobalt, basically) that can deliver the thick, chewy amps needed to fast-charge the car battery.
So once you add that to the cost, this '$50,000 car' will be an even worse deal than it currently appears.
If people want a real economic recovery, then the government should reduce the risk of investing in new businesses, which create and sustain economic growth.
Of course all the progressives will say that "favors the rich" etc and so on to any suggestion that makes businesses succeed. Which means that success is punished, and failure is rewarded, as it is currently in this country.
Here is my plan.
1) Capital Gains taxes on long term investments will be 0%. Long term investment = 5 years or longer. No taxes on dividends on any investment property (real or stock or otherwise) held over 5 years.
2) Simplfy tax codes to a flat and progressive personal income tax of 10 and 20%, with a generous personal exemption, say first 15,000 of income. However, everyone pays a minimum tax $100(or whatever). Everyone has to send a tax into the government. The reason is people who don't pay any taxes don't care what it is spent on; "it isn't my money".
3) Lawsuit reform. People can sue for real damages (pain suffering etc) still, but limits will be placed so that it no longer a "get rich quick" scheme. Additionally, punitive damages do not go to the vicim, but rather to the state (victims fund), and there is a Lawyer cap fee of 5% on those.
4) Patent Reform which includes peer review process for patent applications. Reforms would require not only abstract but a working (fully funtional) form of the invention. Software, mathmatical and other such "process" applications are void.
Breaking the stranglehold of government interference into earning a livelyhood is paramount to fixing the systemic problems we have now.
However, I'm sure that there is someone somewhere that would protest these very simple and sure solutions because it is "unfair" to someone somewhere. Well guess what? NOT having these rules are unfair to those that want the government to get out of the way so we can actually get stuff done.
There is something wrong when the government makes more on everything than the businesses providing the services and products being taxed (NewYork I'm looking at you!!!).
Four very simple things to do that would free up businesses to make products and services without having to look over their shoulder every two seconds to see some government or lawyer coming at them for something.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
"Electric cars just can't charge fast enough to be as practical as regular cars, due to limitations of the grid, and this has nothing to do with Tesla's engineering."
Why do you need fast charging for local trips? If most or all of your trips are local, who cares?
Most people like unlimited range (with quick fueling) for its potential rather than actual need-hence cars like the Volt.
Oh, if we help out Tesla we might actually get an innovative product to buy in the end
What's so innovative about a $50,000 electric car? The Volt seems far more useful in the real world and that's looking at a price around $40,000 even with GM's enormous benefits costs folded into the costs.
Problems of GM should be viewed in light of the failed public policies of the US government. The question is not that GM should have been allowed to go belly up, but, how did GM last so long to begin with, in the face of such governing incompetence on both sides of the aisle.
Front and center is this policy of free trade. The idea of American competition is a total sham. We have been hearing for 50 years that opening our markets to the world would improve our standard of living, and induce the world to do the same, and neither has happened. Instead, the world is more protectionist than ever, makes every excuse to avoid reciprocating imports.
Saying that free trade makes a sick industry better is like telling a chemo patient to take a jog. Friendly competition between industries in different nations is only beneficial if it were friendly. They are not.
Keep in mind that over the last 40 years GM has been paying for the health care of a MILLION of its retirees, and in doing so, basically subsidizes the health care of everyone else in the country.
One could make the argument that until the USA does have some sort of nationalized medicine and protectionist policy, every manufacturing center in the USA will fail.
This is my sig.
Last I heard, they weren't looking for a straight up bailout, but a loan, which would have been authorized under a government program set up a while back, to provide business loans for development of alternative fuel cars.
That is, of course, completely false. The Roadster is as much a conversion car as Nancy Pelosi is an evangelical. The percent of parts the Roadster shares with the Elise, by count or by mass, is in the single digits. It's the same basic layout and styling, and the body is built in the same factory, but it's a completely different car. It has to be, not only to extend performance, but also to deal with the radically different weight and volume distribution. And if anything, developing the battery pack is probably the most difficult aspect. You think it's easy to individually isolate thousands of laptop cells against fire or failure and to get them to last over half a decade? Not that pouring 200-ish kilowatts into an inverter and motor is a walk in the park either. Powertrain 1.5 took some serious work to make happen, and this was on top of their previous work of improving over the base AC-150 design. And need we even mention the whole transmission issue, in that there wasn't a *single* extant transmission on the market that could handle their engine, and the company that they hired to try and build one failed (the motor ripped the transmission to pieces in short order)? Major, major engineering challenges.
I believe Bird-Person can arrange that.
Real GDP is not a measure of inflation as it is adjusted for prices. The GDP deflator can be used as a measure of inflation, but it marks the difference between nominal and real GDP and is a measure of the change in prices. So, no, when I said "real GDP per capita", that cannot be really read as a measure of inflation. So, the correlation between the financial statistic and reality is that adjusted for prices, the GDP has actually increased, which means that output increased.
I agree with some ideas that you have, but you seem to suffer from anti-governmental propaganda.
No one seems to understand that this huge bust we're in is fully due to a relaxation of government regulation. If there was a simple rule that said companies had to provide transparency to these credit default swaps, or face legal consequences for lying about it, it could have been avoided. If the rules separating banks, insurance companies, and investment banks hadn't been repealed, this would be a much smaller problem. If mortgages still had to be held by the originating bank, there would be no problem.
But this isn't surprising, it's based on simple market principle. Capital investments flooded into financial markets because there are no rules against high interest rates, and the return for building a factory is nothing compared to that of selling a mortgage to an unqualified lender, and then selling that debt to someone else. No one is building anything real because they are addicted to 5-10% yearly returns after the first year they invested. World financial markets might as well be a trillion dollar casino.
A lack of a accountability is the real problem. Accountability only comes into play when there are easy to understand rules, and consistent punishment for breaking them. So, I agree with you on the simplification of tax code, and patent reform.
As for a lack of Capital gains taxes, I'm not so sure. I'd get on board with a carrot and stick program (must exist entirely in the US, must have a certain amount of company benefits, etc), but I doubt it could be written without any loopholes.
Lawyer reform - this one is a bit trickier. I think the "loser pays" option is a good idea, with one exception: a person can apply for exemption to this rule by a jury, with the provision that any punitive damages will not go to the prosecution. This would allow justice to be served to larger corporations who have legal fees that could drown a small country.
But, as one of those "progressives" I don't think removing taxes works, because we've tried that already. How about removing incentives for ripping people off, and implementing tested and successful financial regulations that create a better atmosphere for long term investment? Take a look at the Canadian banking system. Proof that regulations work, and the market isn't always right.
This is just plain stupid. Look, Tesla wants to be "alternative" but in reality it's just a sportscar with an electrical motors and a shitload of batteries. That's their vision. What the hell is innovative about that? You use the similar amount of energy as any car, but now in electrical form.
The goal is to fuel with electricity, which is obtainable in many environmentally friendly, renewable or "endlessly-available" sources, as opposed to fueling a car with less environmentally, less renewable sources.
:-) :-) :-) :-) :-) to :-| :-) to :-(
:-( :-) to :-|
Tesla/Electric fuel sources:
windmills
hydroelectric
solar
geo-thermal
nuclear
combustion
GM/hybrid/Internal combustion energy sources:
petroleum - very
ethanol
Okay can we finally dispense with calling any of this stimulus money? Tesla is a small company making electric cars for rich people. Great, nothing wrong with rich people or Tesla. However, giving such a small company "stimulus money" is disingenuous and certainly out of the realm of what this money was supposed to do. You can argue the good that will come and how "eventually" they will start making affordable cars. Give the market and Tesla incentives, not cash that supposed to "stimulate" the economy. I don't know how many employees they have but I seriously doubt its enough to jumpstart the local economy around the Tesla plant.
I'm sick of this CRA FUD. How is disallowing discrimination in lending the same as requiring bad loans? It isn't. All CRA did was end the practice of "redlining", where entire neighborhoods were considered no-lend zones regardless of the particulars of any applicant, and the practice of requiring higher down-payements for minorities compared to equally qualified non-minority lenders. CRA never required banks to make loans to unqualified applicants. It merely required that they stop assuming anyone with dark skin or from a poor neighborhood was unqualified. It had nothing to do with sub-prime lending.
Many banks were fully compliant with CRA, and they did just fine through the crisis, and in surveys have not listed the CRA loans as risky. The ones who got greedy, decided to leverage themselves at ridiculous ratios, and started handing out sub-prime "liar loans" because all they were going to do was package it up in a bunch of other securities to hide the risk and resell it chose to do so.
Then, once the crisis hit, they decided to blame it all on poor people. Even though most of the sub-prime lending came from banks that weren't even covered by CRA! There's plenty of blame to go around, including on the liberals/Ds who did ignore warnings, but it was not CRA (and by extension, poor minorities) that did it.
No, let's cut the BS and get down to brass tacks: "Capitalism" is people doing whatever they can within the law to make a buck. "20% down with good credit and insurance" is sound lending, and one way to make a buck. "0% down with us believing whatever you say on the form since we won't be taking on the risk anyway" is unsound lending, but still a way to make a buck. Both are capitalism, but sadly you don't get to get to pick which route people pursue. You just get to face the aftermath when too much of the industry goes the stupid route. So guess what, if you want everyone to follow your utopian view of how "capitalism" lends money, then you need to regulate that behavior.
The enemies of Democracy are