Congratulations, big spender. You just loaned half a billion dollars to a company that makes luxury electric cars
At the same time that Obama is doling out billions of dollars to Chrysler and General Motors in a misguided attempt to ensure their survival, he’s also loaning money to a highly-speculative start-up car company called Tesla Motors.
Never heard of Tesla? That’s not too surprising. It’s a Silicon Valley-based car company that’s attempting to find a market for it’s $109,000 luxury electric roadster.
Yes. You read that correctly. Their basic model starts at $109,000.
The New York Post said it is “marketed toward a wealthy, green clientele (and) the monthly payments will cost roughly $1,700 after $20,000 down.”
Another brilliant investment by the genius Obama boys.
OnCars.com reports:
Tesla Motors will receive one of the first loans from the U.S. Department of Energy’s $25 billion automakers’ assistance program. The Silicon Valley electric car builder will use the funds to complete development of its Model S sedan and electric power trains being licensed to other auto manufacturers, such as Mercedes-Benz.
The DoE loan is reported to be $465m. Added to the $50m invested last month by Daimler plus the debt and equity already invested in the company, Tesla now sports a $700m capital war chest. Tesla plans to use $365m of the DoE monies to bring the Model S into production with the remainder going to customer power train development.
Henry Ford was known for telling his customers, “You can have any color as long as it’s black.” The Tesla corollary says, “You can have any color as long as it’s green.”
$465 million?
Pardon us. We’re feeling a little green right now, too.
Source: New York Post, OnCars.com
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{ 11 comments… read them below or add one }
Is there any particular reason you don’t mention the fact that Tesla is in development of a model that will sell for $49k? The prices on these cars will continue to come down as more can be produced, so this seems like a great investment that will be more likely to produce a return than the money given to GM. It actually looks like one of the few good investments that this administration has made recently.
Yes.
1) Because it’s not in production, and 2) it’s still half as ridiculous–why should we pay a half billion to build $50,000 2-seater mini electric race cars? We should not pay anything, but if we are going to spend the money, let’s build $20,000 utilitarian cars that can seat more than two people.
Corrected by Tesla in comment below: The $50K model will not be a 2-seater car, but a sedan.
20K for a utilitarian car? dude, you have way too much money. Utilitarian cars start at 2K and top out at $5K. Get back in touch with the workin man.
It’s not a 2 seater… it’s a sedan. Don’t lose your credibility over a quick fact-check. The auto companies and unions have killed the American car industry and this is a chance to bring it back.
Well top gear tested tesla – and it doesnt look good:
http://www.youtube.com/watch?v=AG3bMKR5eXk
I’ve embedded it here for you
Video:
Regarding the politics of the DOE ATVM Loan awards:
So it turns out to be all the best loans money can buy.
Ford paid over $14M to elected officials and consultants in order to get the loan. Ford paid the third largest amount and Ford got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. 21 elected officials had direct benefit from the deal.
Nissan paid over $10M to elected officials and consultants in order to get the loan. Nissan paid the third largest amount and Nissan got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. The law and public statements by elected officials state that the money was to increase American competitiveness for America car companies yet the money was given to a Japanese company who will send all of the profits back to Japan. 7 elected officials had direct benefit from the deal.
Tesla paid over $100,000.00 to elected officials and consultants in order to get the loan. Tesla paid the third largest amount and Tesla got the third largest loan. This is disclosed in public records searches and lobby filings just revealed. Tesla’s filings show that their business model is unsustainable compared to competitors, that they were 200% off on the BOM of their car, that all of their first funding was wasted so they have to pay back twice as much to investors as competing companies and that their technology is so old, it all needs to be redone yet they still got money. 18 elected officials had direct benefit from the deal. Tesla did not even read the rules for the loan and planned to build a building when the NEPA rules make that option impossible so they had to restart the process, which is supposed to put one into a new cycle yet they were kept in the previous cycle and put ahead of Fisker, Bright and others who had applied earlier than Tesla. Tesla provided massively creative accounting records to show that they were financially sustainable and have issued numerous press releases to try to make people think that but, in fact, the truth is that they are not because of bad management issues that they cannot get past.
The ATVM program was created by Ford, GM & Chrysler lobbyists to pad their company’s pockets and those three had pre-hardwired the entire $25B for their own pockets but something happened in the process when Senator Bingaman added a few key lines that opened the door for OTHERS to apply to build green technology and required that those who get the money were “financially sustainable” businesses. Back when the ATVM was authored to save Detroit, it was fully known that Detroit was going to go bankrupt. Ford had the same problems as GM and Chrysler but they went around the world getting bailout money instead of going first to US funds. As law required public exposure of the bankruptcy, Bingaman’s brilliant plan to finally create a green transportation industry was revealed. The very people that had stopped green cars for over 100 years suddenly became the first people to, accidently, cause them to happen but now others could do it too.
Bingaman should get the Congressional Medal of Honor for pulling off this impossible trick and finally giving America the Electric Cars it should have had for the last hundred years.
Once Detroit realized this, they tried to hijack the whole ATVM program with a takeback at the end of 2008 but that effort was defeated by a close late night vote. Now that it was out there, Detroit lobbyists and influencers fought to get the review of applicants delayed for as long as possible because they realized that, in a recession, most of the smaller competing interests could be forced to go out of business if they could just be kept away from the money for long enough. Major American TARP banks have said that the standard commercial loan process that each of these 26 applicants (not hundreds of applicants- There were 26 applicants in the round) should take 4 weeks at the longest and 3 weeks nominally. The lobbyists for Ford & Nissan forced DOE to change the rules part way through and eliminate the “first come- first served” traditional American business ethic that had been written into the law of ATVM Section 136. They got it changed to “It does not matter how together you were, or that you had your application in on time, we are moving these three guys in ahead of you because they spent more money on the politicians and lobbyists”. It seems clear that the loans were delayed due to political agendas and not process issues. It is not that there were no resources for the review as the Section 136 law provided over $10M in staff fees to review 26 people (Banks spend $10,000.00 to review 26 applications)
Bright Automotive had applied on time, ahead of the others, turned in low overhead numbers and a great path too profit but they were virtually ignored while intensive meetings were conducted with Nissan, Ford and Tesla because those parties paid for it. The law says that this, and the purchasing of favors, gave those parties an unfair business advantage using taxpayer dollars, over Bright. A case Bright would easily win if they choose to run with it.
Clearly, it isn’t over yet. Stay tuned for the Senate, Congressional, Ethics Committee and media reviews of this one. Watch for the charts connecting who-to-who. (It is OK to re-post this)
im not that smart and this post will probably prove it further, to me the problem, leaving cost out of the equation, is the battery development, im sure someone besides china is working on this but watching the video and the car dying after 55 miles im curious as to what is being done to use the cars energy as its moving to recharge itself. just thinking out loud here, im sure they are doing all they can do to make these things better, im also sure they could have been perfected many years ago if not for big oil which is most likely still the problem today. all that being said, i will never be able to afford one of them and im not sure i can go without the sound of a 4 barrel carb when you floor it, maybe add some sound effects to them also,, lol
I realize the point of this blog is to critique the Obama administration. But this particular post contains numerous errors of fact and incorrect assumptions about Tesla and the vehicle loan program.
The first is that the Advanced Technology Vehicle Manufacturing Program was created in 2007 — during the George W. Bush administration — and has absolutely nothing to do with the recent “bailout” funds to GM or Chrysler on the eves of the bankruptcies. Nor does the ATVM have anything to do with the current stimulus program.
Rather, the 2-year-old program was created in order to get fuel-efficient vehicles to customers faster in order to minimize the negative consequences of America’s dangerous addiction to foreign oil. This was a program aimed squarely at energy security, an issue that has ripple effects touching nearly every national interest, from military affairs to diplomacy to public education. It should also be noted that the Bush administration’s Department of Energy specifically earmarked as part of the Advanced Technology Vehicle Manufacturing Program a percentage of funds for smaller, innovative startups. The entire point of the program is avoid an ideological bias toward one technology over the other and instead invest in an array of technologies — but only after a tremendously rigorous due diligence on the part of the federal agency, which has been familiarizing itself with Tesla’s loan application for nearly two years and conducted a thorough, open-book investigation into Tesla’s technology and financial viability before approving the applications.
Secondly, it’s preposterous to imply that the loans will be used in any way for the $109,000 Roadster two-seat sports car, the first production EV to get more than 200 miles per charge. The Roadster business unit is expected to be profitable this summer. Instead, Tesla will use $365 million of the loans to finance production engineering and assembly of the Model S, an all-electric family sedan with an anticipated base price of $49,900 after the federal tax credit. Not sure where you got your erroneous data or how skilled you are at math, but the Model S has room for FIVE adults and TWO children, which equals SEVEN passengers. This car’s base price is half the price of the company’s first vehicle, the Roadster – and it exemplifies how Tesla is relentlessly driving down the cost of EV technology. This strategy is well known in Silicon Valley, where technology companies have successfully driven down the costs of products ranging from flat-screen TVs to cellular phones. But apparently it’s not well known to this blogger.
In that context, it’s crucial to discuss not only the sticker price of the Model S but the total cost of ownership. When you consider the much cheaper cost of electricity over gasoline, as well as dramatically lower service and maintenance costs of an EV (which does not need oil changes, muffler system repairs, spark plugs, pistons, belts and dozens of other parts that break or wear down on an internal combustion engine vehicle), the lifetime cost of the Model S is equivalent to a gas guzzler with a sticker price of $35,000 or lower. This is comparable to a fully loaded Ford Taurus — yet the Model S has far more passenger and cargo capacity than anything in its class, including station wagons and some SUVs.
Finally, Tesla will use $100 million in low-interest loans in order to build a powertrain manufacturing facility that will produce electric vehicle components and integrated powertrain solutions for other automakers precisely so that other automakers can build and sell more affordable Evs for the masses. For instance, Tesla supplies electric components to Daimler for the upcoming electric version of the affordalbe Smart city car. Tesla is indeed the market leader on Evs, and it is still the only production automaker selling a highway-capable EV today. However, the company has no intention of keeping EV technology under lock and key. Quite the contrary: One of the overarching goals of Tesla is to advance the electrification of the automobile so that consumers worldwide can have cost-effective alternatives to gas guzzlers.
Hope that clarifies things for you.
Rachel Konrad
Tesla Motors Inc.
San Carlos, CA
It’s unfortunate that most of the people that are for electric cars (which I am) are not for nuclear power plants. Where the heck do people think that we are going to get the energy to power these cars?
I’m a fan of some of Elon Musk’s work and hope he can develop Space X into the winner of COTS (if that program doesn’t get completely dropped). Tesla Motors, however, is a project I’m far less excited about and as far as motoring goes I think there is far greater promise in developing fuels from algae as J. Craig Venter and Exxon are working on.
Of course any serious attempt at energy independence will require a commitment to nuclear, but if the government is determined to pour money into the so called “alternative energy” field then I say lets go back to the moon collect some Helium 3 and get the fusion reactors going!