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Tesla Nabs $465M Government Loan To Build Model S
SignalFreq writes "Tesla Motors, based in San Carlos, California, was approved yesterday for $465M in loans from the Department of Energy's Advanced Technology Vehicles Manufacturing program. Tesla plans to use $365M of the money to finance a manufacturing facility for the Model S (review, Letterman video) and $100M for a powertrain manufacturing plant in the SF Bay Area. 'Tesla will use the ATVM loan precisely the way that Congress intended — as the capital needed to build sustainable transport,' said Tesla CEO and Product Architect Elon Musk. Tesla expects the Model S to ship in late 2011 and the base cost to be $57,400 ($49,900 after a federal tax credit). Ford received $5.9B and Nissan received $1.6B under the same program."
Obama socialist?
People who claim that Obama or the American Democratic party for that matter is socialist needs to take a trip around the globe. In many European countries the Democrats would be considered a right wing party.
> I know. Just like those silly Interstate highways
Roads are specifically mentioned in the US Constitution. Pass
> the US Marine Corps
A Navy is specifically mentioned. The Marines are a sub unit of the Navy. Pass
> the US Postal Service that'll deliver
Postal service is permitted. Pass. But note that most packages use private carriers these days, the postal service is mostly for bills and junk mail.
> and those terribly inefficient and socialized Firefighters and that neo-communist socialized Police Department
Those services are not provided by the US government. Federal money for those purposes are unconstitutional. Good luck getting enough literate Supremes to be able to figure that out any time soon.
US Taxpayer money to a private automaker? Fail. Unless you can point me to the clause I missed that specifically grants the US government that power the 10th Amendment forbids it. Again, good luck finding five Supremes who can read.
Democrat delenda est
The technology does not exist yet to make a $25k electric car that can succeed in the American market. Tesla is right to start with the high-price, high-profit end of the market and work their way down to the high-volume mainstream as the technology matures and the supply chain scales up. Trying to start out by making a capable electric car for the mainstream American market is a much riskier move, and requires much more up-front money - hence the much larger handouts that have gone to the more established automakers. Tesla, on the other hand, has already established their electric vehicle business as profitable, and can use their profits and experience from the Roadster to help subsidize the development of the Model S.
just a guess, but it could be because of the 3 manufacturing plants and 1100 dealerships Nissan has in the US.
It breaks my pluginses, my precious!
Cars are cheap because nearly everybody in this country needs a car. You need a car to get to work, you need it to get to school and you need it for recreation. Sure, if you happen to live in a major city there is also mass transit, but for a large percentage of the population a car is a necessary reality.
Now, with that being said - what happens when something is produced in such great numbers? Economies of scale - the price is driven down due to mass production. Vehicles that cost $13,000 USD are a reality and they're not half bad either. A pretty decent car can be purchased for $20,000, and a really good car for $30,000. Luxury vehicles are nearly anything $40,000 and above.
What about electric cars? They aren't mass produced in any great number just yet, because so far everyone is content with dropping $13,000 on a car that's just "good enough" for their needs. Why do I need an electric vehicle? What benefit does it give me _right now_? Fuel costs decrease significantly, yes - but enough to offset the price of the car? Probably not, even over the lifetime of the vehicle. Therein lies the problem.
Electric vehicles - especially from a non-big 3 startup - are something I believe the government should assist. Your tax dollars are helping fund the future, because while you may not be able to afford this vehicle at $50,000, you might be able to afford the next car they produce using the profits of the Model S.
When the world is filled with "good enough" and people who like "good enough" - how do you convince people to switch to something better?
everyday is another shooter.
should have been a 25K car cost cap.
In the electric car industry, that's simply too big a jump to make all at once. If your ultimate goal is to produce 200,000 $25k cars a year, and the current state of the art is 2,000 $100k cars a year (the Tesla Roadster), then it's only reasonable to expect to produce 20,000 $50k cars (the Tesla Model S) as a stepping-stone. The market is there, and those early adopters will facilitate the eventual availability of the $25k mass-market car you're talking about. If you do the math, the "rich" purchasers of the Model S will be kicking in about one billion dollars a year towards this goal, double the government loan amount. So think before you knock 'em.
Weeks of coding saves hours of planning.
In other words the taxpayers just had half a billion stolen from them and given to some idiot Californicators to waste on building overpriced cars that will only sell if they are subsidized with yet more taxpayer dollars.
Seriously, if these cars were such a great moneymaking venture I don't think California is lacking in venture capitalists even in a recession. You only go to the government with hat in hand if you know it is a losing idea but can be made politically appealing anyway. These days you just have to say "green!" to crack open the piggy bank.
Who built the Interstates?
Drill baby drill - on Mars
At $50,000 the Model S is more likely to be used as a fleet car then something you use at home. For those who say this is a waste of money I'd like to point three things out: 1. GM spend 1.2 BILLION to build a PROTOTYPE electric car, which they didn't put into productions. This is money to build a factory that will actually um make cars. 2. Tesla is going to use this money to build electric vehicle components in the US for other companies. Having that kind of production is the US is BIG DEAL for our balance ot trade. 3. Tesla is more likely to pay
> If you have such a problem with half a billion dollar loan, I'd hate to see how
> you'd react to the $5.9 billion loan Ford just got from the same program.
I'm pissed off about that too. I'm pissed off at the money we are pissing away on the auto bailouts in general. We spent all that money.... and they went bankrupt anyway. But since they cheated and didn't let them do a proper bankruptcy it's going to be f&%king Groundhog Day in Detroit for the next 3 1/2 years as they keep going bankrupt over and over again and the US taxpayer keeps stuffing money down the UAW rathole and relaunching the zombie automakers.
Democrat delenda est
You remind me of my Dad in 1975 when new cars were required to have catalytic converters and could no longer use leaded gas.
I've lost all my marbles except one & It's fun to test angular & centripetal acceleration in my skull
Why is the United States government giving money to Nissan? Shouldn't the Japanese government do that and not the U. S. taxpayer?
They are getting money because they are trying to produce a car that might help the US reduce its dependence on dangerous, foreign, terror-funding oil.
They are getting money because they might employ you, and many other US citizens.
They are in a better position to employ you and others than 2 of the 3 major American car manufacturers because they are not shite.
Surely you don't think they are taking the money back to Tokyo to spend on kimonos?
People, with machines.
Ask Apple — that is, once they recover from the devastating choices of entering the saturated mp3 player and smartphone markets.
"I guess the moral of the story is, don't paint your airship with rocket fuel." -- Addison Bain
I'm anti-subsidy for luxury car manufacturers. Starting at $49,900 -- bah! How about spending a fraction of this to rip out the engine of a Chevy Aveo and put in an electric motor? How about an electric car people can actually buy? Innovation not required!
There is a bit more to the Tesla cars than just ripping out the ICE and putting in a regular electric motor. There is very advanced liquid-cooled Lithium Ion battery technology, a next-gen 3-phase/4 pole motor, etc. It performs at par or better than other cars in its price point, and is also practical (can carry 5 passengers and their luggage comfortably). It is easily 200 to 300 percent more energy efficient than a typical hybrid as well. Luxury or not, getting such a vehicle to market is very worthwhile. Remember the Prius was the favourite toy of green-wannabe celebrities and rich folk in its early adoption phase, and this is a much better alternative.
Given the nature of the technology this is the ONLY way to bring it forward. I think GM's approach (with bringing out a less exotic Chevy Volt) or yours (an even more austere Aveo) is backwards. Say it costs $5000 to $10000 to implement the advanced battery and drivetrain at this point in development. This means the cost of an electric Aveo would be 50+ percent higher than for a gas one, which is "cheap enough" to run in the first place. NOBODY who is willing to be an "early adopter" would buy an electric aveo at a profitable price point, because green and innovative as the drivetrain would be, the rest of the car is actually rather crappy.
OTOH, The Tesla S is probably no more tha 10 or 20% more expensive than a comparable car that runs on petroleum fuel. Early adopters tend to be more affluent as well, and when you get to that less-than-20% premium for something cool and new. This car has a realistic chance of making a profit, or at least paying back its loans. The Volt or an electric Aveo would be a guaranteed money loser.
Remember, that Tesla got its loans specifically because it has committed to re-investing profits from early, more exotic/expensive models into more practical, affordable models. Even in its early stages on the market it has established a track record: It followed up an exotic, very expensive roadster with a luxury sedan that is actually very practical and within the price range of upper-middle class households (the ones who buy Escalades, BMW 5 or 7 series, etc). Ensuring the success of the S means the much more likely possibility of an under $30K vehicle that competes right in the mainstream sedan market.
If the US is going to get all socialist on us, I'm glad it isn't following the tired old thinking that to support innovation it must have this fixation on immediately addressing the needs of the "masses" or "working poor" or that crap, when it isn't realistic from a business perspective. Certainly better than taking a controlling interest in a loser bankrupt GM or gifting Chrysler to the unions--doing both with massive loans backing the moves (if taxpayers weren't forced to accept such nonsense, thay'd never in their right mind invest in such shaky enterprises). GM in particular has been the ABSOLUTE LEAST INNOVATIVE auto company on the entire planet for decades--even its best products are dependable but very boring and un-innovative, and they've invested the least into new technologies in their plants out of EVERY SINGLE company that builds cars in N America.
If my gov't is going to throw boatloads of cash around on speculative enterprises, I'd MUCH rather it go do something bold, new, exciting and innovative like Tesla than something tired, old and nothing to show for in terms of innovation than words and vague plans crafted for the purpose of begging for alms from the gov't. as GM and Chrysler have done in the last year.
Because the money is going to a Nissan plant in TN that is being retrofitted to develop, manufacture, and test cutting edge batteries. Would you rather that the DOE does not provided to money on some idiotic jingoistic grounds only so that a future industry in and that portion of the economy is cornered in Japan?
$100M for a powertrain manufacturing plant in the SF Bay Area
How on earth can that be the cheapest place to manufacture something?
I suspect the factory location is more political than practical ("I've love to help you get that loan, but you know, it'd sure be nice if you located that factory in my state").
Advice: on VPS providers
> the TARP thing was needed.
Was it? Everybody said that..... but 'everybody' seemed to be the ones either handing out the money or the politically connected people who were lining up to take the money. And then they didn't even spend most of the money to solve the 'toxic asset' problem that we were assured was going to bring on a depression. No, they nationalized banks, insurance companies and automakers with most of it and show every sign of keeping any money that does get paid back as a giant off the books slush fund.
Not the only one who is starting to smell a giant rat. Seeing the same 'masters of the universe' types moving seamlessly between Wall Street, the Bush administration and now the Obama camp spending Sagans of cash that was called into existence from nothing to bail out old money companies who did stupid things because they were afraid of being called names by Democrats.
Democrat delenda est
Loans to people/companies who can actually pay them back yield a lot of money. Average return on a 15 year mortgage, for example, is about double. It's also frontloaded, so they make most of the profit by year 10 and all that is left is the principal that needs to be paid back.
Corporate loans work similarly, so if Company X pays back a 1 billion dollar loan in 10 years, the loaner has made a profit of probably around 50-75%.
That's a whole lot different than a grant, in which case the money is free so long as it is used for the specific purpose it was granted for.
Loans are a good thing as long as there is a good reassurance that the loan will be paid back. I don't mind a loan to Nissan, since they have a number of US factories and have a very solid business. That means more jobs and money for the US.
Loans should NOT be given to US companies that look like they might fail. That's what got the mortgage industry into trouble and helped cause this crisis in the first place. Propping up a failing business is bad practice, but helping a viable business become more viable and more profitable is good practice, especially when you can get a good return on your investment. All we should care about when granting these loans are two things: Will it create more lasting jobs in the US, and will we get are money back and then some. If we start fudging the second one just because it is a US based company, then we'll be headed for more heartache.
Security is mostly a superstition... Avoiding danger is no safer in the long run than outright exposure. - Helen Keller
I don't particularly care whose district it's in; I'm just glad the gov't. is loaning money to a company that A.) has a good chance of paying it back and B.) develops a technology that decreases our dependence on oil.
One question. If the 'general welfare' clause were intended to be as open ended as you guys believe it to be, why did they feel a need to carefully enumerate the powers and limitations in the lines directly under that header?
So we have two competing theories:
1. The 'general welfare' clause, along with the other all purpose commerce clause, grant unlimited powers to the Federal government making the 9th and 10th Amendments (passed as Amendments btw which can override the original document) null and void.
2. The words 'general welfare' appear in the section heading describing the general flavor of the more specific defined powers granted in the section which taken together define the limits of Congress's powers to 'provide for the common defense and general welfare of the United States.'
But since you posted as an AC it is doubtful you will man up and even try to answer.
Democrat delenda est
I've been to Europe, so, yes, I have seen and used the public transportation system. (Props to the Netherlands and Germany!) The U.S. just needs to take a look at its infrastructure and wonder whether all of that stimulus might be spent on other endeavors that have a greater impact on the greatest amount of people. We should not be so concerned with keeping the car companies alive for the short term. Let us thing in the long term.
SiO2