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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.
It's a LOAN, not a bailout. You have to pay back loans. College students get them all the time, but you don't see people complaining about them.
(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.'"
No, not really. Not for a cutting edge...early adopter technology no. I mean, you see lots of Joe sixpacks getting LCD HDTV's today, which a few years ago, were much too $$$ for them, and only for the 'rich'.
You gotta start somewhere man...no, not everyone can afford the first things out the door. It takes time, those early adopters, that can afford them...pave the way for Joe and Sall Sixpack later down the road.
Geez, for some reason....there seems to be an almost inherit distaste for anyone with any type of wealth in this country these days. You almost seem to feel some level of vitriol anytime someone mentions people who make over $100K/yr and can afford something slightly 'nicer' than the people living in the projects.
Are we at the beginning of a race to the bottom...where no one can have an advantage no matter how hard they try?
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
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.
So... in your view, products should never be researched and manufactured until your average bear can afford them?
That would be really upsetting news to people who made the first... oh, computers... televisions... CD players... PMPs... DSLRs... video cameras... multichannel stereos... general coverage receivers... GPS units... satellite television receivers...
You know. Things that come under the heading of "stuff that we've never had before because it requires high technology."
So I have a question. If these things aren't initially developed for people with deeper pockets, then where is the money to develop them supposed to come from? Over to you.
I've fallen off your lawn, and I can't get up.
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.
I'm sorry, but a $50,000 car is STILL just for the wealthy.
While I agree that only the wealthy can afford a Model S, Tesla is the only company that has demonstrated a viable business plan for producing electric cars. As they continue to produce them, they expect the price to come down.
they would still need a different vehicle for taking the kids to soccer games, camping, etc. where more passenger and cargo space are needed.
Actually, they wouldn't. The Model S seats 7, believe it or not. The electric drive train provides more space for storage. There is room for cargo under the hood (bonnet) because that space isn't needed for an engine.
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
With government monies, does that mean we will get some openness into their car's technology or other aspects such as cost of goods sold, cost of manufacturing and other details in the breakdown? Is it possible that the car actually costs nearly $50k? What about other factors of production that could later lead to lower-cost production cars? If they sell the first models for higher prices, doesn't that then allow them to build larger facilities and cheaper cars by volume? Furthermore, since the parts used in creating the cars will likely be sourced from outside the company, there will likely be parts that could be used by other makers of the same or similar technologies that will compete with Tesla and therefore also serve to drive costs down.
I think the beginnings of new things are ALWAYS ridiculously high priced. Does anyone recall the first microwave ovens? Not only were they crappy, but they were QUITE expensive.
I say let the electric car get made and see where things go. If we never try, it will never happen.
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
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.
They're not asking to be bailed out. If you didn't count the money they're spending on developing the Model S, Telsa would be profitable today -- and they're still scaling up Roadster production. They're asking for loans to speed up the creation of *new models* that are more affordable to a mass market. They don't need any sort of subsidy to keep on doing what they're already doing in making Roadsters.
I believe Bird-Person can arrange that.
Geez, for some reason....there seems to be an almost inherit distaste for anyone with any type of wealth in this country these days. You almost seem to feel some level of vitriol anytime someone mentions people who make over $100K/yr and can afford something slightly 'nicer' than the people living in the projects.
The problem started when some people stopped believing that hard work, dedication, and pride in one's work are the way to get ahead in life. In other words, you earned your riches. Now what seems to be important is that you make as much money as quickly as possible with no regard to ethics, morals, or who you screw over.
I believe this is the reason people are so up in arms and rightfully so.
We're miles better than before. It's inarguable. Pick any measure you want - real GDP per capita, etc - we are better off. My Google Fu is failing at the moment, but there are several economic studies that have shown the differences between countries that have free trade and those that don't. The group with free trade shows much higher growth over any period you look at than does the group without free trade. I wish I had a link at the moment, but there are peer reviewed journal articles with this data.
Please provide evidence to support this statement. The WTO is aware of 421 regional trade agreements, over 90% of which are free trade agreements. These include NAFTA, CAFTA, EU, EFTU, MERCOSUR, AFTA, COMESA, etc. On top of that, many countries have free trade agreements with countries outside of their regional area.
Protectionist policies are part of what has hurt the US automakers. They were protected for too long and they weren't forced to be competitive. If we're unable to make cars and be competitive, then we shouldn't do it - it's economically inefficient. Why pay more to do it ourselves than we could pay someone else to do it? That's just bad business. Protectionist policies are failures - protecting an industry causes higher prices and inferior quality. Competition improves quality and lowers prices.
Additionally, there is a strong ethical argument against protectionism. "Buy American" is essentially a racist statement. You're implying that the value of an American is higher than that of someone from another country by saying that it's better to protect industries in this country to protect the jobs. At some point, we've got to start calling out "Buy American" for the racist statement that it is.
I guess that depends on what you mean by "Buy American." Honda and Toyota have manufacturing plants in America. Is it "buying American" when you purchase a car manufactured at one of these plants? I'd argue that it is. All other things being equal, I see nothing wrong with "Buy American." It isn't really that much different than the "Buy Local" movement that is popular across the country, especially here in Vermont.
Buying products that are made/grown in closer proximity to you has many advantages:
* Lower transportation costs & less pollution
* Keeps the money you're spending in the local economy
* Helps to secure employment for local people
* Encourages cohesion in the local community
Obviously, the scale of "local" depends on the situation, but I don't see why at least some of the benefits don't scale up to the national level. What is wrong with wanting to improve the economic situation in the neighborhood/town/city/state/country where you live? You do, after all, live there. You need to have a job. A steady income. Services like fresh water, sewer, police, hospitals, etc.
Buy and bailout GM just to protect the pensioner?
I know for a fact (being the grandson of a pensioner) that Goodrich has enough money in their pension fund that none of their current pensioners have a single worry were Goodrich/Michelin go bankrupt. It's already set aside. In fact, they sent out a letter to the pensioners saying that they put aside TOO MUCH and were being required by the IRS to take some back. (Capital-to-pensioner ratio was too high.)
Why did GM not put the money aside into an interest-bearing escrow account all along? It is tax-deductible, and we all know how much corporations like deductions. That should've been set aside long ago as a portion of each paycheck everyone's parents and grandparents earned.
I don't think that we should feel obligated to buy a GM car now because they didn't manage their pension money properly yesterday. It would be cheaper just to top off the pension fund and provide some new start-ups with low-interest loans to get themselves on their feet and managing their money more wisely.
-Pope Peter Porker, S.O.W., K.M.K.R., U.G.O.A., F.S.G.S.D.
The problem with those growth studies, is that it always seems that the "growth" is always concentrated to the upper end of the economic scales. I don't live their and don't care about their prosperity - and I suspect a growing number of other working Americans are starting to notice the same thing. So the "growth" proponents are really going to have to come up with something new to sell.
I do agree that traditional "trickle down" bailout programs that propped up these auto makers in the 80s have propped them up in a position that does not help them become competitive, and the proof is in the pudding - if these American car companies want me to buy American, they had better make a better car than I can get for the money from an American built Japanese car company.
http://www.unfocus.com/
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.
You're from Vermont, have you read McKibben's book? I read it, and while I like certain aspects of it, I'm just not sure it's realistic.
Why do you want to limit economic improvement to certain people?
The problem is that US car companies *are* building cars many want to buy... regulations prevent them from selling them here...
There's a turbo diesel PT Crusier that get 65+ mpg... I'd buy one in a heartbeat... can't get one here...
If the US gov would move the sulfur emissions regulations to the fuel side (require sale of only sulfur free diesel) rather than the cars, we'd have more fuel efficient cars than we'd know what to do with ...
Sadly, we've had decades where the petro industry has been lining the pockets of our representatives better than the auto industry has been able to do. So we're stuck with car companies that aren't *allowed* to sell us what we want.
This is *not* an Union workers issue... This is not an incompetent auto industry issue... this is yet another corrupt government issue...
It's time to deal in reality, rather than the propaganda we're being fed.
"Buy American" is essentially a racist statement.
Eh, last I checked, "American" isn't a race...
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.
Please mod this up.
Any "conservative" or "libertarian" promotic so-called "free trade" is a liar and a fraud. They simply DO NOT WANT FREE TRADE. What they want is to have trade barriers altered to favor THEIR PRODUCTS. Not the American economy as a whole. Not the taxpayer. But themselves and their campaign donors. The same "free traders" that decry subsidized health care don't say one word about the MASSIVE US agricultural and energy subsidies, because they're making money in those industries. They're making money in the insurance companies as well which is why they fight tooth and nail to cut costs there. Insurance, basically ALL insurance in ALL forms, is a fraudulently used to abuse consumers.
As I've said numerous times before the #1 problem in America, far beyond "terrorists", the "drug war", etc. is CORPORATE fraud. Corporate fraud is the cause of the financial crisis. Corporate fraud eats up about 50% of every American's paycheck. I believe the problem has gotten so bad that LLCs have to cease to exist for fraud claims. The only solution at this point is to hold officers and major shareholders personally and individually criminally responsible for corporate fraud. We need a dedicated federal agency staffed by hundreds of agents doing NOTHING by corporate fraud prosecutions. Such an agency would cost $0. It would more than pay for itself in fines.
Someone needs to write a bot to post a response every time someone blames the financial crisis on the CRA or in some other way largely on the GSE's.
"Federal Reserve Board data shows that:
* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics."
- http://www.mcclatchydc.com/251/story/53802.html
Here's a few other links:
http://www.ptmortgage.com/blog/2008/10/01/pointing-fingers-was-it-cra-and-minority-lending-that-caused-the-mortgage-mess/
http://debatebothsides.com/showthread.php?t=73500
http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis
http://www.frbsf.org/news/speeches/2008/0331.html
There is also a summary at Wikipedia.
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