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Tesla CEO Says Gov't Loan Is 99% Sure and Deserved 652

Posted by samzenpus
from the get-your-piece-of-the-pie dept.
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."
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Tesla CEO Says Gov't Loan Is 99% Sure and Deserved

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  • In other news... (Score:5, Insightful)

    by fyngyrz (762201) * on Monday April 13, 2009 @12:06PM (#27557729) Homepage Journal

    ...Buggy whip manufacturers say that loans to "internal combustion engine" companies inappropriately drives technology that is "not ready for prime time"; they also state that "horses have a long way to go yet" when making their case that they should get the loan, rather than these newfangled folks. "Horses are cheaper", claims CEO of International Whipping Boys, Inc. Valley professor and writer Randall Stross wrote that was a risky waste of taxpayer money that would only benefit the wealthy and bailout VCs who'd sunk money into the money-losing internal combustion company.

    • by drinkypoo (153816) <martin.espinoza@gmail.com> on Monday April 13, 2009 @12:14PM (#27557849) Homepage Journal

      (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.

      • 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 t

        • by bwalling (195998) on Monday April 13, 2009 @01:13PM (#27558783) Homepage

          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

          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.

          the world is more protectionist than ever

          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.

          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.

          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.

          • by Crazy Man on Fire (153457) on Monday April 13, 2009 @01:31PM (#27559095) Homepage

            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.

            • by bwalling (195998) on Monday April 13, 2009 @02:02PM (#27559693) Homepage
              I agree that there's an appealing aspect to "Buy Local", but the reality is that it's economically inefficient. I think you'd be surprised by the aggregate effect of this on the economy if everyone were to do it. Surely you agree that specialization can improve efficiency, right? Why do you buy carrots from a local farmer when you could do the same in your own yard and not have to drive to his market?

              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.

              What is wrong with wanting to improve the economic situation in the neighborhood/town/city/state/country where you live?

              Why do you want to limit economic improvement to certain people?

            • Re: (Score:3, Interesting)

              by tjstork (137384)

              I guess that depends on what you mean by "Buy American."

              Buying products that are made/grown in closer proximity to you has many advantages

              Well, I agree with buying local anywhere in the world is the best way to go. I think the nation state is a good as boundary as any but I can see smaller nations wanting to buddy up.

              What is wrong with wanting to improve the economic situation in the neighborhood/town/city/state/country where you live?

              Agreed. It's like, people think, hey, nothing will happen when they buy

          • Re: (Score:3, Interesting)

            by fiannaFailMan (702447)

            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 couldn't agree more. Remember all those grandstanding congressmen grilling the auto makers but making sure to get their soundbites in about how they all drive American cars? If I were up there I'd be saying "I drive a Mitsubishi Eclipse because the cars you guys make all suck! Now get your asses in gear and make cars that people want to buy for a change!"

            It reminds me of the talk about protecting 'American' jobs, all the anti-visa and anti-immigration groups calling for protectionism of American workers.

          • by Touvan (868256) on Monday April 13, 2009 @01:54PM (#27559523) Homepage

            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.

            • Re: (Score:3, Interesting)

              by Anonymous Coward

              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 po

            • Re: (Score:3, Insightful)

              by nelsonal (549144)
              The new Chevy Malibu is almost universally regarded as the best car in it's class. Sticker is cheaper than it's peers (Altima, Accord, Camry) except the Camry, and after incentives it's the lowest price of the bunch. Their sales are up 50% from last year (and it's not all just rental companies), so plenty of folks are deciding that GM is doing something right.
          • by superdave80 (1226592) on Monday April 13, 2009 @02:21PM (#27560089)

            "Buy American" is essentially a racist statement.

            Eh, last I checked, "American" isn't a race...

          • Re: (Score:3, Funny)

            "Racist". You keep using that word, I do not think it means what you think it means...
        • by rtechie (244489) * on Monday April 13, 2009 @02:54PM (#27560813)

          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.

      • Re: (Score:3, Informative)

        by rolfwind (528248)

        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 i

        • by lupine (100665) * on Monday April 13, 2009 @01:12PM (#27558773) Journal

          Batteries(95% efficient) * Electric Motor(95% efficient) = 90% efficient
          ICE(20-25%) * Batteries(95% efficient) * Electric Motor(95% efficient) =
          23% efficient

          The tesla has a range of 220 miles on 53kwh of batteries.
          The amount of energy in the batteries is equivalent to about 2 gallons of gas.
          Electricity cost to fill the pack, about $4.

          I agree that the Aptera is a more innovative design, the slippery shape is more aerodynamic and the front wheel drive train is more efficient at capturing regen brake energy more effectively. The Aptera will initially only be sold in California and I am not sure how a three wheeler would handle the snow so I probably wont be buying one soon.

          But the Tesla pure electric drive train is more efficient overall and they have been building and delivering vehicles, but as you said 120k is too much for a vehicle. The model S is more tempting, but still very pricey.

          • by Gription (1006467) on Monday April 13, 2009 @01:42PM (#27559283)

            Batteries(95% efficient) * Electric Motor(95% efficient) = 90% efficient
            ...

            You forgot a a major part of the system. It doesn't start at the batteries. It starts and the power plant. The losses over just the transmission lines are estimated at 7.x%. The actual generation equipment isn't 100% efficient either.
            It still is better then internal combustion by a whole bunch though and power plants are much more efficient then an ICEs and cleaner too...

        • by g8oz (144003) on Monday April 13, 2009 @01:55PM (#27559537)

          Are you serious? "Offloading the environmental footprint to the electric generation station" is a *HUGE* step forward for automobiles.

          And their vision is far more than a sports car. Its about using cash flow and experience gained from high end luxury cars to create mass market electric vehicles that normal people would want to drive. Not to knock Aptera, but Tesla is creating a new kind of car company. Aptera is creating an interesting device.

        • You claim their goal is not worth pursuing, but it is.

          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.

          Tesla/Electric fuel sources:
          windmills :-)
          hydroelectric :-)
          solar :-)
          geo-thermal :-)
          nuclear :-) to :-|
          combustion :-) to :-(

          GM/hybrid/Internal combustion energy sources:
          petroleum - very :-(
          ethanol :-) to :-|

        • Re: (Score:3, Insightful)

          by forand (530402)
          As best I can tell from the links you provided Aptera has yet to produce anything. All their "pictures" are photo shopped and you can't buy ANYTHING. Tesla is selling an electric car NOW, you may not like it and it may cost to much and be too sporty for you but they are doing something. Finally as others have already noted an electric sports car is better than the traditional simply due to the efficiency in energy generation and usage.
        • Re: (Score:3, Insightful)

          by BlueParrot (965239)

          All Tesla really does is offload the environmental footprint to the electric generation station

          Siiiigh, do we have to go through this every time ?

          i)Even if that was all they did it would still be worth it to move emissions away from population centers.

          ii)Power station turbines are more efficient than internal combustion engines, even when transmission losses are taken into account.

          iii)Because power stations are stationary you can fit them with better filters, catalysts and scrubbers that are superior to wha

    • by martinw89 (1229324) on Monday April 13, 2009 @12:17PM (#27557895)

      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.

      • by Chrontius (654879) on Monday April 13, 2009 @12:23PM (#27557975)
        High-current home batteries. They sit on the wall and trickle-charge over 14 hours, and you plug the car into it (with a bus-bar) and it fully charges in between 5 and 30 minutes. Tesla could do this, if they could afford to engineer it. Until and unless we run heftier power cables to homes, or install EV charging stations at the gas station, we put up with overnight charges.

        Point is, this can change with a little work and/or commitment.
      • Re: (Score:2, Insightful)

        by Lapzilla (739264)
        Keep in mind that TopGear, while often entertaining, has a certain "style" with editing footage together to convey whatever message they feel like conveying. Really though, how often do you drive >200 miles in a day? Typically you're not going to completely deplete the battery every day, and you're going to be leaving the car charging overnight, so for most drivers that would work out quite well.
      • by nine-times (778537) <nine.times@gmail.com> on Monday April 13, 2009 @12:34PM (#27558151) Homepage

        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.

        Maybe. Or maybe that means we should put more money into battery-swapping stations.

        It doesn't seem to me that a problem like that should cause you to say, "Oh, whoops, I guess we can't use these cars because the battery runs out after driving for a few hours straight. Sinking any more money into this would be a waste." You run out of gasoline after driving for a few hours straight, and we developed a system where our country is littered with "gas stations" to help us refuel.

      • by Rei (128717) on Monday April 13, 2009 @12:35PM (#27558171) Homepage

        You do realize that Top Gear admits to having faked the episode, right? It's an entertainment show; quit taking it so seriously.

        As for your particular example: No, it doesn't take 14 hours to charge. The *standard* Tesla charger takes about 3 hours to charge a fully dead battery, and that's only *if* you drove it about 240 miles that day on a drivecycle akin to the EPA combined numbers / 120-200 if you raced everywhere / 50-100 if you were sprinting on a track. How often do you drive 240 miles a day, or race 120-200 miles? Even if you only charge it on a standard garage NEMA 5-15 (they're usually on a 20A breaker, so 18A is a safe draw, and let's assume 117V): Wall to wheels on the Roadster is about 250Wh/mi, combined. The average person drives about 35 miles a day. 35mi*25kW/mi=8750Wh=8750VAh. 8750VAh / 117V / 18A = 4.15h. So even if you, for some reason, *don't* have the standard charger installed, you can easily handle your daily drive and then some just on an ordinary wall socket. And a dryer socket has 3 times the power as a garage socket, and a range or RV socket 5 times the power.

        That's why we need something that can be refueled quickly, which the Tesla certainly is not

        Tesla is working on 45 minute charging stations for the Roadster and Model S. Of course, that limitation is due to their particular, unusual choice of batteries. Most other li-ion variants being considered for automotive applications can charge far faster. The titanates, for example, can charge in 5 to 10 minutes. Oh, and Tesla is planning to offer pack swapping for the Model S.

      • Re: (Score:3, Insightful)

        by Joce640k (829181)

        The problem is the batteries ... but if you wait until super batteries appear before even starting to develop a car then you'll never make a car. It's chicken and egg.

        The first car was obviously going to be expensive to buy so it had to be something flashy (if it was dull/mundane the rich people would ignore it). It was always very high-risk.

      • You have to buy 2 according to Top Gear having one on charge. Why not carry that idea further and have an easy change battery station where all of the gas stations are and it will work.

        That's the real tough nut to crack, infrastructure, infrastructure, infrastructure.

    • by spirality (188417)

      The government shouldn't pick winners and losers regardless of what the perception of the technology is. No government loans for Tesla. No government loans for GM. The Public Private Partnerships smack of fascism.

  • "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."

    Not to mention, Tesla makes cars that are fugly like most of the current offerings out there today.

    • the fact that Tesla probably benefited greatly from that one billion dollar plus that GM spent.

      Sorry, but the snide comment at the end of submission is just ignorant. First, if you looked at what the EV1 accomplished when it did it was nothing short of a great stride in electric cars. Coming to the numbers GM is at is something that Tesla hasn't gotten to and as such makes them immune to spare parts and related laws that GM is beholden too. So not only does GM have to gen up the tech they have to support

      • Oil is going to run out folks. What are we going to do? Make a choice. Doesn't Honda make a hydrogen powered fuel cell to electric already for sale in California?

        The way I see it is that we have to build new infrastructure if the batteries can't be made to work reasonably well. The first and only way to do it is to use something that is already proven. Hydrogen is already proven but probably made from fossil fuels now. Maybe embedding induction in the highways for electric transport on the interstates and b

    • by RingDev (879105) on Monday April 13, 2009 @12:24PM (#27558009) Homepage Journal

      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

      • Re: (Score:3, Informative)

        by cayenne8 (626475)
        "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 think you mis-read me. I think the Tesla looks

        • by RingDev (879105)

          The greatest thing about servicing a Tesla... There's barely any!

          No oil to change. No spark plugs. No air filter. No oxygen sensors. No timing belts.

          Sure, you still have to get the alignment checked, break pads replaced, and batteries recycled. But you have a couple of solid state plug and pull components, a 1-speed manual tranny, and a big honking AC motor. There's not a whole lot in there for the drive train that can break.

          Right now my commute is almost all interstate speed, so a Turbo Diesel is my best b

    • I used to work with a guy that claimed to hate how nearly every car on the road looked. When I asked him what he did like, he showed me a picture online of some godawful pile of metal. I think it was a Citroen or something. It looked like the reincarnation of the Chevy Citation after difficult birth. Oh, and *his* car was an ancient VW Thing.
  • You know, if this trend holds, their next car will be competitive with the Civic-and-Corolla crowd. Thoughts on what technologies will be needed to pull this off?
  • by ender06 (913978) on Monday April 13, 2009 @12:14PM (#27557841)
    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.
    • Re: (Score:3, Insightful)

      by johnsonav (1098915)

      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.

      • The US Government sets policies through money -- normally, in the form of tax incentives; if you do (x), we won't take the money back from you for doing it.

        So yes, they're giving Tesla money -- but it's much closer to the current practices of tax law, but much less open-ended.

        The government could've put out a grant with specifications to develop the cars for fleet vehicles, and then allowed them to sell it to the public (more like the original Hummer), or they could've used earmarks to find a way to fund th

    • by DriedClexler (814907) on Monday April 13, 2009 @12:27PM (#27558055)

      You're ultimately correct that the loan is not a bailout for Tesla, but I wanted to add a few clarifying points (which make Tesla look even better):

      Much of the bailout for the Big Three was also in the form of loans. Where Tesla differs, however, is that Tesla actually has a chance of paying it back, while it's pure fantasy to believe GM and Chrysler could do the same. The former's bonds are currently yielding 220% [marketwatch.com] or thereabouts, meaning investors place a HUGE risk discount on loaning to GM. In contrast, Tesla's biggest "problem" is keeping up with demand.

      Moreover, whatever the pretense of the "loans", including the one allegedly to help "retool" for more energy efficient cars, the fact of the matter is that the money for the Big Three is really going to pay off legacy costs that they were too stupid and short-sighted to plan for, *not* to improving technology, and especially not when you consider how close to collapse they are.

      Now, in fairness, I don't think the government should be making these loans at all. (To the extent that the environment is a problem, that should be addressed by pricing environmental costs into fossil fuels, and then let the market do whatever's efficient given that price premium.) However, *if* it's going to make these loans, they should go to companies that have a realistic chance of accomplishing the stated goals of the loans. And so far, Tesla has been far more efficient at it, and has no legacy costs to pay off.

    • by TheSync (5291)

      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.

      If a corporation gets a loan, when it goes bankrupt the firm's remaining assets, if any, will be divided among its lenders, and they will often see only a small part of their total principal repaid.

      On the other hand, guaranteed students loans survive personal bankruptcy under current law....

      It is a bailout because if all they needed was a loan, and they had a real c

    • by Jaeph (710098)

      Cheap college loans are the reason college prices have exploded over the years, as well as a large part of why college educations have become more and more worthless in practice.

      Everything government touches it screws up. Remember this.

      -Jeff

    • by scotch (102596)

      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.

      Unless the corporation goes bankrupt. Nah, that'd never happen.

  • by AmiMoJo (196126) <.ten.3dlrow. .ta. .ojom.> on Monday April 13, 2009 @12:15PM (#27557871) Homepage

    Looks like whoever figured it out (sorry, I forget your handle) was right! They finally figured out the "???" step:

    1. Have environmentally friendly idea
    2. Realise it's too expensive and the market too small to keep you afloat
    3. Get government hand-out
    4. Profit!

  • 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.

  • After providing a $25000M bailout to Detroit's Big Three, when asked if he should earmark $350M in loan guarantees to Tesla Motors in order to appease California voters, the Automotive Czar was reported to have said, "Tesla? How many lobbyists do they have? [bartleby.com]"
  • by alta (1263) on Monday April 13, 2009 @12:19PM (#27557927) Homepage Journal

    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.

    • by ADRA (37398) on Monday April 13, 2009 @12:32PM (#27558113)

      Their replacements would do the same thing over and over ad-infinitum, so what are you really advocating? I've worked in industry long enough to know that people don't change unless their forced to.

      Even if every one of these companies did crash and burn, the executives still walk away filthy rich with the middle and lower tiers completely fucked. I fail to see how this encourages good business practices for those sitting in these positions of power.

      PS: Capitalism may be an ideal that people aspire to, but I can't think of anywhere more than tiny island nations (embezzlement) that practice laissez faire capitalism. If anything, its been propped up by cold war paranoia as the bastion of human accomplishment. Too bad there wasn't a cheesy 70's exaggeration movie to exemplify the possible problems. Oh wait, there's rollerball...

    • And never mind what happens to the country and its citizens!
    • by brkello (642429) on Monday April 13, 2009 @12:44PM (#27558373)
      Um, duh, we all know the government bailing out companies isn't capitalism. Capitalism is selling homes to everyone regardless of their ability to pay. Then taking those sub-prime mortgages, making them in to little pieces, mixing them up with good loans, give them a high rating, and insuring them. With everyone buying houses, prices sky-rocket, so that even if the people can't afford the house, you reclaim it and sell it for even more money.

      Oh wait, that's what got us in this mess. Capitalism has a lot of wonderful qualities. But it needs to be regulated. Not too much, not too little...but simply screaming capitalism and how it is the solution to everything is naive at best...complete and utterly stupid given the current situation at worst.
    • by copponex (13876) on Monday April 13, 2009 @01:09PM (#27558729) Homepage

      Right. And would you like to provide an example of a purely capitalist society that has survived without subsidies and regulations?

      Like it or not, you have to have rules to keep greed in check. This basic principle has been understood since people have been able to communicate. You have to have government spending to soften the natural cycles of the market, or else you end up in a boom and bust period that will end in catastrophe. You have to socialize or heavily regulate infrastructure or you will end up with companies that wield too much power, or costs that start denying a majority of citizens basic needs, which leads to revolutions or totalitarian dictatorships.

      No amount of shouting will fix this reality. And if you want some more information, READ the Wealth of Nations. You'll discover that he supported regulation, taxing the wealthy, tariffs, protectionism, and laws against high interest rates. I know this would conflict with your ideology, but that's the problem with ideology. It's based on anecdotal evidence and similar nonsense.

  • 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

    And that's the story, folks.

  • The difference is GM made a name for itself before asking for government money (the bailout is still technically a loan, isn't it? maybe that's just the financial sector).

    The gov't shouldn't loan money to start-ups unless it gets a share of the company... just like any other VC.
  • by Archangel Michael (180766) on Monday April 13, 2009 @12:35PM (#27558173) Journal

    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.

    • by TheSync (5291)

      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.

      Now if only we can get the GOP and the Democrats to buy into this....

    • Anti-Politics (Score:5, Insightful)

      by copponex (13876) on Monday April 13, 2009 @01:58PM (#27559597) Homepage

      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.

  • Why is it that when there's funding for a new fleet of presidential cars with increased fuel efficiency from Tesla---mind you, the Secret Service has been getting a new fleet of cars every year already, weirdly---on the basis that buying from them will ease mass production costs, the Republicans call it "massive wasteful earmark pork barrel spending", but when funding for a new presidential helicopter fleet with security features like shooting frickin' lasers is cut, there's also a massive backlash? The cy
    • by Kligat (1244968)
      Sorry for the info dump. I could swear it separated into paragraphs last time I formatted it that way. Here it is with better formatting:

      Why is it that when there's funding for a new fleet of presidential cars with increased fuel efficiency from Tesla---mind you, the Secret Service has been getting a new fleet of cars every year already, weirdly---on the basis that buying from them will ease mass production costs, the Republicans call it "massive wasteful earmark pork barrel spending", but when funding fo

  • [...]waste of taxpayer money that would only benefit the wealthy and bailout VCs who'd sunk money into the money-losing company.[...]

    And that different from the Wall Street bailout exactly how?

    Oh, if we help out Tesla we might actually get an innovative product to buy in the end, whereas with Wall Street we just get empty promises of the whole economy not collapsing as long as we prop them up.

    Right.

    • Re: (Score:3, Insightful)

      by 0123456 (636235)

      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.

  • And the real losers in this bailout (besides tax payers) are all the other companies that are managing to make affordable electric/hybrid vehicles today without this subsidy. Now these companies who focused on practical compromises rather than flash are at a financial disadvantage to Tesla. Way to go Congress.

  • Tesla's CFO [imnotboredanymore.com] agrees

  • Great (Score:3, Insightful)

    by jav1231 (539129) on Monday April 13, 2009 @02:51PM (#27560753)
    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.

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