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Elon Musk Bailed Out of $6bn Google Takeover To Save Tesla From 2013 Bankruptcy
An anonymous reader sends word that Elon Musk almost sold Tesla to Google in 2013 when the company was close to bankruptcy. "Elon Musk had a deal to sell his electric car company Tesla, to Google for $6bn (£4bn) when it was heading for bankruptcy with just two weeks' worth of cash left in the bank. During the first week of March 2013, Musk spoke to his friend Larry Page, chief executive of Google, about the search giant buying his car company, which at the time was suffering from falling sales amid technical problems with the few Model S luxury sedan cars it had delivered. Ashlee Vance, author of upcoming book Elon Musk: Tesla, SpaceX and the Quest for a Fantastic Future, claims in an extra for Bloomberg two people 'with direct knowledge of the deal' said Musk and Page agreed to the buyout and shook on a price of around $6bn. This was plus promises from Google to invest $5bn for factory expansion and to not break Tesla up or close it down."
This is FUD. You may argue that Department of Energy should have acted as venture capitalist and demanded more return, but it is not a loss. It is potential profit that was not received. Congress explicitly required Department lend on low rates and they have good reasons for it. Department is not a venture capitalist and should not act as such, such activity should be left to private business, not Government entity. There is big difference between corporations requiring bailout because of their own mismanagement or fraud while doing usual business and corporations trying to introduce something completely new, that may benefit all taxpayers in the long run. Hence the loan was from Department of ENERGY, not Treasury.
This is FUD. You may argue that Department of Energy should have acted as venture capitalist and demanded more return, but it is not a loss. It is potential profit that was not received. Congress explicitly required Department lend on low rates and they have good reasons for it. Department is not a venture capitalist and should not act as such, such activity should be left to private business, not Government entity. There is big difference between corporations requiring bailout because of their own mismanagement or fraud while doing usual business and corporations trying to introduce something completely new, that may benefit all taxpayers in the long run. Hence the loan was from Department of ENERGY, not Treasury.
And yet, the federal government makes loans to grad students in the 6% to 7% range. A failing tech company with a billionaire owner gets low interest loans because of the potential for the future, but low and middle income grad students, who really are the future get high rate loans.
But there is no such thing as a free market. Yet most people still agree that competition helps drive [pun] the economy.
It isn't really about a free market, but about capitalism as an economic system. According to capitalism, Tesla, should have gone to the banks or investors and if Musk's plan was good, he would have received the capital he needed to stave off bankruptcy. He actually did that and had a deal worked out. However, the government also intervened in the market and offered him a better deal. That is not capitalism, but corporatism (which is the politically correct modern name for fascism).
Either way, Musk and Tesla would have staved off bankruptcy, the difference is that with the government bailout/loan, Musk gets to keep control of Tesla, whereas the Google investment would have split control. It's not so much about a free market, but instead about the government intervening in the economy that seems to benefit only a select few. I'm not saying that the government should not have loaned the money to Musk. I am saying it should only have done so if there were no other option. Since there was another option, although less palatable to Musk, he should not have received a federal bailout.
Put differently, unlike the GM bailout, this bailout was to somebody in the 1% group to enable him to make luxury automobiles for others in the 1%. All paid for by the 99% who can't afford such a vehicle in the first place. It may be argued that GM was too big to allow to fail, but it is hard to argue that about Tesla, particularly when there was private financing available.
No, "corporatism" was Mussolini's preferred phrase, over that of "fascism." It is not "fascism" by any stretch of the imagination for a company to get a loan from the government.
And subjected himself to the whims of the corporations that gave him money? I'm sure they totally wouldn't interfere with the way the company operated, they'd never start demanding ridiculous growth at the cost of product quality and customer service, not at all.
At worst there is no difference. At best, it prevented an actually innovative company from sinking and its technology dispersing into the market, never to be heard from again while GM et. al. continued doing what they were doing.
So because one wrong policy is wrong, we should make all other policies that are remotely related wrong too? Is that what you are arguing here?
How about we just fix the wrong one (higher-than-mortgage-rates interest-bearing student loans)?
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