Comments on: Ta ta, Tesla

Are the Valley-based VCs and big-wigs who back Tesla Motors really serious about asking the federal government for low-interest loans?

[johnsbrn1]

I disagree. I would rather put money into a company creating inovative products that will wean us off of foreign oil than dump it into the pocketbooks of automakers who not only don't innovate, they even fail to adapt to changing markets or listen to their customers. I think investing into emerging technology is exactly what the federal government should be doing with it's money. That is the only thing that will save us in the long-term.

[icanspendmyownmoney]

"I think investing into emerging technology is exactly what the federal government should be doing with it's money."

The government doesn't have money of its own - it takes our money in the form of taxes. I disagree with most social programs, and I certainly don't believe that the government should be handing out my money to businesses. If the government has money for something like this, it's probably time for my taxes to be cut.

[rapier1]

You do realize that the internet stated out as one of these investments by the feds into emerging technologies right? In fact, it sucked off the government teat for decades. The next generation stuff still does. Do you think that was a bad investment?

[LuvThatCO2]

The internet wasnt 'bailed out'. The networking systems that would become the internet were created to serve specific purposes for the government & military. Its not a valid comparison. Not all government spending is a bail out. Its supremely dumb to give *private* companies that cant make good business decisions - be they banks or auto makers - even *more* money to lose.

[johnsbrn1]

I could be wrong, but I don't believe Tesla is looking to be "bailed out", they are looking to accelerate growth. The problem with some technologies is that they require a lot of money, but that money won't come from the private sector because profit is uncertain or too far in the future. The government makes investments into the private sector all the time with tax incentives. I think a lot of people fail to see that there is no difference between targeted tax incentives and just giving money away. In either case, this is not a hand-out, it's a loan. We NEED these technologies, and if there was enough interest in the private sector that would be great, but there is not, so in this case the government should step in to help bring these emerging technologies to market faster. The space program might be a good analogy for this. There has been tremendous benefit from space technologies, but there is no way we could have done it in the private sector. Do you think the government should have cut taxes instead of developing the technology to allow us to have satellites?

[johnsbrn1]

In fact, if you want to encourage the private sector to invest in this stuff, perhaps a program of government "matching funds" might be a good way to go. Not sure if it has ever been done before, but it seems like a step in the right direction. Tesla did just raise 40 million in private sector funding.

[x002657]

I agree with the basic point of the article. VCs are, perhaps, the biggest gamblers among all investors. Just as a professional card player enters a game with thorough knowledge of it and hard-earned experience rather than a gut feeling, VCs need to do the same.

At the moment, the country needs jobs more than anything else, including electric vehicles. As incomes decrease or disappear, even "fat cats" will feel the impact.

In addition to not listening to their customers, and, given the wrangling in Washington over the bailout, the so-called "auto czar", <i>and</i> the history of the "Big Three", (as well as their prior - but long-gone - competition), I think this proves that <i>no one</i> in the U.S. truly understands the auto industry, even those who were "raised" in it. (And, BTW, what does <i>that</i> history say about the chances for success in the auto industry of a former Home Depot exec, with experience in big-box, home improvement retail? I suspect it bodes worse for Chrysler's future than Ford's and GM's).

[sartor1]

Tesla should get the 400 million loan!
They are a true pioneer in the auto industry!
I'm surprised that GM et al, haven't teamed up with them,
or bought them out! Geesh!

[Thomas, David]

If you read the story, or follow the news on Ford, don't be surprised if they don't want to swallow Tesla. This time, not to stifle them, but to inject their R&D, and accelerate their delivery of Ford electric cars.

I am puzzled though, it seems like no one is even talking about the previous electric cars the big three produced, then collectively killed off, in the not too recent past.

[Cheetahjab]

Pioneer? Tesla = Take Lotus Chassis, fill with lithim batteries, put in 2 speed electric drive train, slap big T on it and sell it for 4 times the cost of the lotus. Pioneers indeed.

[hjecompany]

Tesla has absolutely NOTHING over GM or any other of the companies making electric vehicles. GM built high-performance electric cars years ago. Performance isn't the issue. Batteries and economy of scale are the issues. The battery technology is the factor holding back the progress of any of the large automotive companies. Tesla isn't making or developing batteries. They're just using the ones that are available, which are not adequate for real daily drivers. It's one thing to sell a few cars out to a select population, who (at the price of the Tesla) may never rely on the car as a primary mode of transportation. It's a TOTALLY other thing to make an affordable car that us plebes can use every day.
The Tesla is a cute car. It is not affordable to those who really need an electric car. They are certainly not "Pioneers".
GM and other major automobile manufacturers have invested huge amounts of R&D both internally and in other battery companies to get batteries that will give the range needed to win over the public, that are affordable, and reliable. Tesla does not have to worry about these details, not at $100K + a car.

[mmntech]

Battery operated electric cars are not the future and never have been. The Telsa is an expensive car and could have only hoped to be a niche product at best. The government shouldn't be shoring up bad investments. The same applies for the Big Three.

[johnsbrn1]

Battery powered cars may or may not be the future, but battery technology is holding back advances in so many other areas. We need a better way to store power, and improving that power storge mechanism is what battery powered cars are all about. I can't afford a Tesla, not many people can, but that's because they're still built by hand instead of being mass-produced in giant factories.

[TogetherinParis]

I disagree, too. Tesla is not vaporware. Neither is Aptera. The manufacture of electrical vehicles has been but a cottage industry here in America and that must change. If we limit emergency funding to the big three auto makers, they will not take the risks of large scale production. They will lack the incentive to innovate beyond tokenism. We will remain vulnerable, our air will remain polluted, and our economy and political system will remain subject to manipulation at the whims of lunatic imams and 'insider' sheiks. We the people should shoulder this risk in order to cast off such fetters.

[TiEsQue]

Based on the title, I initially thought this article was about Tesla being acquired by Indian auto manufacturer Tata Motors. Funny.

[Joe Real]

Seriously, not a single shard of penny from taxpayers money should be put into Tesla to support the super ritzy people have their own toys. Tesla has not produced a car that is affordable to a person with a median income in the US. Unless Tesla can show that they are able to mass produce electric cars cheaper than GM's Volt and at par when it comes to electric mile range and perhaps better battery performance, like using that of A123, then I might change my mind in supporting Tesla. But sadly, their cars are only for the very rich, and we don't want to give more taxpayers money to the insanely wealthy class.

Rather, give the $400 Million to Aptera Motors. They produce the most sensible affordable cars.

[johnsbrn1]

I like Aptera too, but it's not about the car right now, it's about the technology. Once someone puts the technology into large scale production, the cost will fall and the cars will become more affordable. Although I really like where Aptera is going with their designs, they don't even have a car in production right now.

[punterjoe]

I'd rather see a tech-forward startup with a modern business model saved than those anachronistic dinosaurs from Detroit. That said, I believe Tesla should find a more innovative way of saving itself than picking the pockets of the taxpayers.
As a hint at what I'm thinking, when I first saw the title of this piece, I thought it was going to be about Tesla being acquired by the Indian industrial giant. Someone with a big enough wallet - and big enough stones, could remake the whole transportation ecosystem - and own much of it for decades to come.

[hirop420]

400 million... yea right.. Just so that they can keep making high priced electric sports cars. Why would we want that? The fundamentals of their technology is great. But their target is wrong. If they would have started by making a smaller engine not capable of Ferrari acceleration and had conservative lines of lets say a Nissan Versa with a price tag of about 30k then a loan of that size might be within reason.

But as of right now they have shown that A) they don't know how to run their business and B) They make bad decisions.

Knowing that why should we the people pay for a company to keep to its failing formula?

[johnsbrn1]

I don't think you understand Tesla's business model. They ARE working on affordable cars, but right now the technology to make a usable electric vehicle is too expensive to put in a $30K car (the Aptera's specs can't hope to match the Tesla and we'll see what the price is when they are actually ready to sell). You can't go from 0 to mass-market in one step.

[gdmaclew]

Something can be said to "anathema" to something else...not "an anathema".

[Jimmu411]

Something can be said to "be anathema" to something else...not to "anathema" to something else.

[mike.loux]

Two (much more affordable) sedan models are in the works. The roadster was a proof of concept. The two new models will cost about as much as the mid and full-size big-three equivalents (and are no doubt aimed at the same demographics). Much more accessible to the public.

That being said, I think Tesla asking the goverment for money is a ballsy move, but as far as I'm concerned, Tesla can have GM and Chrysler's share of the bailout money. The only big 3 company that has made any significant safety advances is Ford, and that's only because they bought Volvo.

[zooski76]

I see a huge push to have electric powered vehicles but, last I checked, electricity doesn't come from magic. It still has to be produced and transferred. Is it okay with everyone that wants electric cars to build more power plants including nuclear, coal, hydro, etc., to meet demand of everyone driving an electric vehicle? If Tesla gets the money, they've set a precident for start-ups getting this type of money from government.

[willdryden]

The mantra of electric cars is drive during the day and charge at night when demand is low. PG&E says they can handle 1,000,000 cars with no increase in power plant construction. It is the 11:00AM to 7PM range that charging would cause a major problem.

[mordac35]

I say if the auto industry wants the money, they should agree to a radical restructuring of their companies. GM is a bloated giant with a lot of fat to cut. Ford is similar but not as bad as GM. Chrysler is now much more lean but still can't produce a car that gets better than 22MPG (that is an observation from the current models on the showroom floor). Tesla has the technology, it is proven, and everything seems to be in place to make magic happen. What they need is a factory to mass produce the car. GM is busy idling several manufacturing plants. Why not turn them over to Tesla, retool them and put those people back to work. Create a joint venture if need be and get it done GM and Tesla!

[NutMac]

Tesla screwed up by building an all-electric car for a segment that largely ignores the concept of fuel economy. Had it targeted more relevant segment, say, soccer mom minivan crowd, it might have some traction in getting additional funding as well as success.

[LuvThatCO2]

If they cant hack it, let Tesla go under. Someone will buy their technology and use it if its of any value. Its just rediculous to give $400 million to a company that makes luxury items for hollywood.

The problem is these bailouts are now replacing the normal venture capital channels. If Tesla really is 'that geat', then they should have no problem raising $400 million. But they apparently arent very good at making smart business decisions (look at their target price point), so that $400 million will probably just get run through in a couple of years and they'll still go under.

[Jack K1]

It's not like IT in another important way: all they need is a few patents in order to clean up. There's no reason why Tesla can't be a pure R&D company.

[open-mind]

$400 million seems like a disproportionately large amount for a company hand-building only a few cars.

And those complaining about lack of innovation from Detroit may want to read up on the Chevy Volt. Fleet vehicle Volt prototypes (assuming GM survives) are now less than a year away. Fleet vehicle Volts may even out-number Tesla Roadsters by the end of 2009.

[johnsbrn1]

It's a LOAN. They just raised $40 million and want a loan for $400 million. That's like having 10% down, which makes them a significantly better investment than a lot of the people the government financed with Fanny May and Freddie Mac. The Volt looks like a step in the right direction, but as with everything they do it's too little too late.

[open-mind]

Yeah johnsprn1, I know the $400 million is a loan. Just like the $40 million loan they just "raised". Last time I checked, you can't use a loan as collateral against another loan.

As for the Volt being "too little too late", I don't understand why people and the media choose to ignore the many reliable and fuel efficient designs from Detroit. I see them for sale, yet to the media they don't exist. The only thing missing from Detroit is a Prius equivalent, and the Volt (as designed) should leap-frog that. Toyota has publicly stated the Volt project and time-line is too ambitious to be possible, and that's why they're not making any similar promises. Guess we'll see.

Agree with you on the Freddie Fannie mess. I don't understand why mismanaged financial institutions seem to deserve unlimited funds with almost no preconditions.

[rickfle]

gee - it says on the upper right corner that this blog is sponsored by Chevy. any connection? nah probably not...

[dep82]

I took a different view of it. In order for the government to approve the 400 mil, Tesla would have to show that they can alter their business model to be relevant to everyday americans, just as the big three do. It seems to me like they are trying to get their foot in the door to be a major player in the US auto industry, and not just cater to the upper class. Also, nowhere in the article was it explicitly stated that Tesla was in trouble, the author just assumes that. They may be vying for a chuck of the money just to expand and develop a product within most americans' price range. That is the only way that the government would approve it anyway.

[willdryden]

That is what they are doing now. The plant they are building in California is to produce a 5 passenger family sedan. They just want to add that model faster than they could considering the current financial crisis. That is what they are saying anyway.

[fredtheviking]

You know what I agree with the author Telsa should look to the market for money. But I can't blame them for looking to the government when that what the big three are doing. As long as there is talk of givning money to car companies, why shouldn't Telsa get a piece of the pie. They may not deserve it, but they are more deserving than the big three. At least they have useful technology that people would want to buy. I would buy a Telsa roadster if I had the money. What does the big three have. A promise like a Volt or other lofty promises. Remember they had their chance before. I don't see why they should be allow to survive for just being dinosuars.

[russ960]

Certainly if this car and company is worth the money it's investors will find the funds. It seems they are just taking this opportunity to take tax payer money rather than putting their own money at risk. Just the same we should not be supporting the big 3 with bailouts.

One item the internet was given as an example of government investment in technology. It was developed for a specific purpose to foster innovation for the Dept of Defense. I don't think the two are the same.

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