Tesla Motors and Government Money

[Cobos]

Of course it should receive scrutiny. Butn that's what application for advanced vehicle programs should get. After all this is the company that has had a pretty responsible management incentives program, created a brand new car with a completely new type of drivetrain for about 1/7th what GM supposedly is spending on the Volt. I fail to see how a Tahoe at $50k-$60k is any more a gentry's car than the Model S is ? The model S even has a drivetrain which doesn't have 100 years of refinement behind it...

I'm sorry for the rant, but the fact that Tesla is asking for a loan in a loan-program created specifically for this kind of project just can't be wrong. In that case it's the programs fault NOT Tesla's... It really IS the big 3 which are perverting this program not Tesla. (Perhaps for a good reason, but that can't be blamed on Tesla)

Cobos

 

[dpeilow]

Looks like the message is getting through:

Tesla plant in San Jose could be delayed by Big Three auto bailout - San Jose Mercury News

Tesla Threatens to Delay Sedan Without Bailout - News and Analysis by PC Magazine

Autocar - Tesla asks for cash < Let down by a lack of understanding of the finances.

Tesla seeks 350 million dollar loan - Latest Car News from 4Car

However, Ford has said that it doesn't want a government bailout; executive chairman Bill Ford jr said: 'Ford is a company trying to pull itself up by its own bootstraps, and making it on its own and pulling the right levers'

Tesla Motors seeking $350 million from Energy Department funds

 

[dpeilow]

KickingTires: Who Killed the Electric Car? A Recession, Maybe?

To see how far this bright industry has fallen, you need only look at Tesla Motors. The once-proud poster child for the electric car movement is asking for $400 million in loans. The money would come from the same $25 billion Department of Energy program the Detroit Three are trying to tap into in order to survive.

 

[graham]

Sigh... I wish articles like this would go away. At this point the best defense against this negative press is for Tesla to continue to churn out great product as fast as possible...

 

[graham]

Tesla Bailout Request Spurs Class-Warfare Backlash | Hybrid Cars

Article talks about the Randall Stross NYT article, as well as Jason Calacanis reply and other things. However, there is a nice statement from Rachel Konrad in the comments section:

Let's get beyond the column in the New York Times, which incidentally ran a correction and two letters to the editor in support of Tesla, and answer the fundamental question that bloggers are debating: Yes, absolutely, the federal government should provide low-interest loans to Tesla (and other R&D-focused automakers that have already demonstrated a commitment to building fuel-efficient vehicles) to encourage and hasten the time to market of a sophisticated all-electric, zero-emission powertrain for affordable, family cars. If this isn’t in the public interest, what is?

Just to set the record straight among the good folks in the blogosphere:

The silly headline (subject of the correction) says Tesla shouldn’t get a low-interest loan from the Department of Energy because “only the rich can afford it.” Afford what? The loan would NOT fund anything having to do with the $109,000 Roadster sports car but rather future generations of more affordable sedans and a powertrain facility to make battery packs and other components for other automakers, which could also use them for affordable sedans and subcompacts.

 

[vfx]

Sigh... I wish articles like this would go away. ....

Wow!

Going through the comments on this one the author got reamed! It was like a proffesional email campaign stepped in. The copy has been reworded now.

Now we need to do the same to all the Top Gear coverage.

 

[graham]

Rachel is on fire today! I have seen her in the comments of many many blog posts, and here is a letter to the editor on one of the Detroit News' unfair posts about Tesla needing a bailout.

Tesla wants loans for affordable electric cars | detnews.com | The Detroit News

The Dec. 11 editorial "Should auto loans subsidize California jet set?" is misleading. Tesla is not applying for a loan to fund the $109,000 Roadster sports car as the editorial suggests. Nor is Tesla applying for loans to cover daily operational expenses or avoid becoming insolvent.

Rather, the low-interest loans would help finance future generations of more affordable sedans and a powertrain facility to make battery packs and other components for other automakers, which could use them to speed the time to market for their own affordable sedans and subcompacts.

 

[doug]

Is Tesla a Good Bet for Taxpayer Dollars? - BusinessWeek

Tesla Motors has defied skeptics by delivering an electric sports car many said would never see a showroom. But to develop a sedan with broader appeal and get a battery plant up and running, Tesla says, it needs $450 million in loans from the Obama Administration. That raises a thorny question: Are taxpayer dollars earmarked for green technology best gambled on small startups such as Tesla or big but troubled players including General Motors (GM) and Ford (F)?

 

[doug]

Why Tesla Motors Won't Likely Get Government Help - Huffington Post

Policymakers will need to decide whether Tesla can survive in a cutthroat marketplace. Being small makes the company nimble but not necessarily scalable. Big parts makers typically won't even look at a car that doesn't sell in the tens of thousands. So Tesla has had trouble getting competitive rates from its suppliers. Mike Donoughe, Tesla's chief of product development, says his expanded supplier base could bring down costs.
...

 

[Palpatine]

Why Tesla Motors Won't Likely Get Government Help - Huffington Post

Here is why Tesla Motors will get the government loan.

House Speaker Nancy Pelosi represents San Francisco and Tesla Motors HQ is in her backyard. The highest number of sold and delivered Tesla Roadsters is in the San Francisco bay area.

I am sure she is getting hometown pressure to make sure Tesla gets the loan. San Jose, just south of her congressional district, is due to get the factory for the Model S.

 

[dpeilow]

Bloomberg.com: Worldwide | Energy Loan Program With No Projects May Get Funds

Congress is planning to direct at least $10 billion in economic stimulus funding to an Energy Department loan guarantee program that hasn’t backed any projects since it began in 2005.
...

The department also has received applications from Tesla Motors Inc., of San Carlos, California, which makes electric cars; and Alico Inc., in La Belle, Florida, and Irvine, California-based BlueFire Ethanol Fuels Inc., both of which are planning cellulosic ethanol plants.

 

[TEG]

Old news but a reminder that the whole program has been 'under fire':

eNewsUSA: Senators Object To DOE's Loan Guarantee Rules

"...we have become exceedingly frustrated by the Administration’s failure to interpret properly the provisions of Title XVII—Incentives for Innovative Technologies… As we examine ways to strengthen our energy security, increase our global competitiveness, and reduce our nation’s greenhouse gas emissions, it is essential that we enhance the federal assistance to the development of the clean energy technologies within the United States."

Round 2 of Nuclear Loan Guarantee Battle About to Begin. Let's Stop Them Entirely This Time! - NIRS

This year, we need to start early and stop this program entirely. It was only with your help and action that most members of Congress even knew there was a DOE loan guarantee program! And your actions prevented the industry from receiving the $50 Billion in guarantees it wanted. Now that the program has received substantial attention, we need to keep the pressure on and end it entirely.

http://www.nytimes.com/2008/11/30/business/30digi.html

 

[TEG]

So, Tesla seems to be 'bending over backwards' to try to secure loans for 'Model S' lately. This includes price changes in the Roadster said to be needed to satisfy the loan application (and perhaps existing investors). Also, it appears that the Zanker road factory / HQ space is being rethought due to fed loans geared more towards revamping rather than building from scratch. If Tesla wasn't hoping to get these government loans, they might have acted very differently recently.

So, I was doing a quick search looking for more info on the loan programs, and I found a bunch of sites saying they think Tesla should NOT get those loans. Personally I hope Tesla does get the loan(s), and I think they are a perfect example of the kind of company the loans were designed to help.

But, for reference here are some of the sites that had other ideas (some of these previously mentioned in this topic):

• Tesla Wants A Piece Of The Hypothetical Auto Bailout Fund
• Should Taxpayers Back a High-End Electric Carmaker?
• Tesla Does Not Need A Bailout Or A Loan
• Commentary: California wants to raid Big 3 bailout cash for green cars | detnews.com | The Detroit News

The rebuttal:
On Bailouts and Sports Car The Jason Calacanis Weblog

 

[siry]

To clarify - there are two loan programs that are very different, although they are both administered by the DOE.

Title XVII loans were a smallish program that was not auto industry specific.

Section 136 of EISA (energy independence and security act) is auto industry specific and was authorized for up to $25B. That is the program that has been getting most of the news lately.

Both programs are still active, but they have different rules, terms and conditions.

 

[TEG]

Should Taxpayers Fuel Tesla Motors? - BusinessWeek

Energy Loan Program With No Projects May Get Funds - Yahoo! News

 

[vfx]

They keep say that Tesla has only sold 140 cars.

 

[Kevin Harney]

They are not SOLD until they are delivered.....

 

[vfx]

Not sure I agree with that.

There are many things that are considered sold without actually taking possession of.

 

[Kevin Harney]

True but in the auto industry that is not the case. It is not SOLD until delivery is taken. And in many states there is a 3-14 day period that you can take it back no questions asked.

 

[graham]

Also from this point on out, they have not actually taken more than 40% or so of the price of the car . Much money is still owed them for each Roadster. Plus those deposits are still 100% refundable, and Tesla itself has not been settled on the final price. So "sold" is relative in this case.

Admittedly it is lame when reporters go down the "they have only sold XXX!!" when they don't qualify that by explaining that they have another 1000 people who have given very significant deposits.