A bailout for Tesla?
$400 million for Tesla?So, Tesla Motors is seeking some $400 million dollars in low interest loans from the government - a tiny piece of the $25 billion that Congress approved to help automakers restructure to meet new CAFE legislation.
Does Tesla really help American fleet fuel economy? Should government money go to a company that will undoubtedly use that money as a bridge to an IPO to further enrich it's VC funders?
Then again, if you're gonna give money to US automakers with a history of inefficiency, why not to a startup?
I'm not terribly against government loans to Tesla, but I do think that any vehicle produced via government money should require proper pricing points. For instance, vehicle cost should be guaranteed to be no more than $40,000, although I really think it should be closer to $30,000.
Labels: electric cars
posted by Dahcredyns at
10:30 AM
15 Comments:
Dahc - Of course they should be entitled to a piece of the pie!
This company has actually laid out a well developed business plan for all to see.
Step 1 - For the first production all electric car, identify and sell to a market segment that already buys low volume high technology, high costs vehicles. The well-to-do are a perfect match for the first "mainstream" all electric cars as "super" sports cars represent an existing rather than a new market segment.
Step 2 - Take the lessons learned from producing that first electric car and apply them to a higher volume and lower cost premium 4-passenger sedan, that again higher than average income people can afford (and will buy because they are willing to pay for the "best"). This is exactly the track Tesla is taking with the design of their second generation vehicle.
Step 3. Repeat the process above, this time with an emphasis on significantly increasing volume and decreasing per unit cost to arrive at an all electric car for the masses.
Imagine that - an American car company with a well laid out plan that if executed successfully, will lead to a revolution in the automotive and energy industries.
Well, they laid out a fantastic business plan for the Roadster several years ago that has consistently over-promised and under-delivered.
So, I take some issue with your "well developed" business plan argument, as Step 1 is still behind schedule. The original "White Star" program is also already behind schedule.
Moreover, the battery for the Roadster, according to most experts, is not financially feasible for a cheap, mass-producable vehicle. So, I'd argue that their business plan isn't really going anywhere as it will have to be totally redeveloped towards what GM, Toyota, Etc are already working on.
Still, I don't think that Tesla, or GM, or any other automaker, should get money to produce any vehicle over $40,000. The money is to help achieve new CAFE regulations. That will require millions of vehicles. Thus, funding should go to vehicles with such capabilities in my opinion.
On a final note, it wasn't that long ago that Tesla was preshopping for an IPO. If this money is guaranteed, I'd bet that it will be utilized to essentially subsidize an IPO before any of this government money produces one new vehicle.
Then, the VCs will get a fancy return on their investment before anything is proven. That serious possibility causes me concern.
Last night I was reading an economist blog and he rewetted my appetite for creative destruction in the auto industry. I couldn't help thinking about radical innovators coming and surprisingly quickly achieving market power. Players like Tesla.
Loan guarantees sound good to me. Taxpayers will get payed back with interest, so what's not to like? We absolutely need to support new auto industry blood.
Of course, it's not clear that Tesla has what it takes to became a Detroit killer, which is what we desperately need.
If the economy were stronger I'd be far more supportive of creative destruction. At this point it seems an intelligently designed prepacked bankruptcy could cause a good bit of intelligent destruction. And, if this could be coupled with some higher CAFE requirements, or new weight requirements on vehicles, a gas tax - something more forceful than the latest CAFE regulations - I think there could be very big changes.
Without an unbelievably unique and proprietary technology, I really don't believe companies like Tesla can become major players any time soon regardless of how much government help given, unless we're talking 10's of billions. Besides, if tesla has any real, marketable success, it will be bought out.
I'd rather advocate more for a company like Aptera which is designing a totally unique take on the automobile, an approach a mainstream automaker would never take, whereas essentially every major automaker is and has been working on tesla-like electric car technology.
Ultimately, every automaker in the US is capable of selling a few thousand $100,000 EV sports cars per year today, there just isn't any profit in it for them.
This post has been removed by the author.
Good point on Aptera vs Tesla, and I would agree. Aptera is much more radical, and thus likely to surprise Detroit, than Tesla.
But I would like to emphasize that America needs a Detroit killer, because otherwise Toyota and Germans will kill Detroit. If Aptera can play a part in developing a whole new value chain in the auto industry, at least we'll have something standing after Detroit goes extinct. If Aptera also dies, or whichever startup has that next successful business model, for lack of government investment, then we'll have nothing after Detroit goes.
Yes, I'm assuming Detroit as it is is gone within 5 years.
hmmm let me see... Tesla Electric or a new Dodge Challenger rt8 with a kick ass gas guzzlin V-8 for the same price? This is a tricky one... Electric is not the answer for a sports car...
Dahc - My point on Tesla with regards to a sound business plan is that Elon Musk identified an existing market that has the financial resources to buy what will necessarily be an expensive 1st generation car. Countless other alt.Detroit car companies have come and gone because they could not build a first generation car at a low enough price for their target market. That is the simple brilliance behind Tesla.
I work in the space program and directly with Elon Musk's other alt. company (SpaceX). There has never been a more viable out-of-the-box space company as SpaceX. I see Tesla as being no different than SpaceX, and would suggest that they are as out there as Aptera.
By the way - I'm a big fan of the Aptera, and would even put money down on one if they would let me (I'm in Texas). As much as I like them, there is a genuine question as to whether the majority of American consumers will suddenly start seeing the beauty in an aerodynamically efficient body design the way egg-head engineers like me do. Also, they are going to run into the problem that Elon has gotten around. Namely, can they get their first generation vehicle priced low enough to match their target market?
With regards to scaling their battery technology. I'd wager that the only significant issue will be the one facing all those who use lithium chemistry batteries - can a stable and competitive market be established to supply all of the raw ingredients required to manufacture the batteries?
EI-
My bet would be that Aptera is not wildly successful, if at all. It will only be a niche producer for a many years, but this company could push consumers and, eventually, major automakers, to build entirely different cars.
I also think there is a big difference between SpaceX and Tesla. The automotive segment is driven purely by mass production. We're a long way from that in the space industry, although I hope we get there.
I don't necessarily disagree that Tesla picked a sweet spot, but Ferrari picked a sweet spot as well, that doesn't make you a mainstream player, particularly in the auto industry.
In terms of batteries, it seems large format batteries have the best chance of being cost-effectively mass produced. Tesla is essentially hand welding numerous cells together. Thus, it's going to be harder to mass produce their battery pack. That approach is very unique in the auto industry, that is true, but I don't think it's the right approach for cheap electric cars.
In fact, I'm starting to believe that Better Place might have the right idea to the battery problem, which is radically different than what most automakers are thinking. Ironically, the future of the auto industry might not even come down to automakers, but to battery and recharging infrastructure companies.
Funding Tesla is a starting point; it gets you into Battery EV production, it fires the imagination and drive within the real buyers; those with more realistic spending power. This drives the demand, the research up and the price down.
MPT PlanetTesla.com
michael-
Tesla has produced only a handful of cars and there is no indication to believe that Tesla will produce any significant amount of EVs until at least 2012 - even though it won't be a significant number then. By that time numerous mainstream automakers and numerous battery suppliers will be producing and selling at least 10's of thousands of EVs per year.
If Tesla is still selling only EVs that cost more than $50,000 - and i think that threshold is too high - I don't think they deserve the money. This money, in my opinion, must be focused on solutions that make cost-effective sense for mainstream consumers as soon as they come off the production line. If not, then promises will outperform delivery.
OK, my last comment on this Tesla string. I'd suggest folks really do their homework on what makes Elon Musk tick. He wants to change the world, and that is why he is building an electric car. He never set out to just build high-end sports cars, he only built them to start with because that is the type of car he could build first and reach break even the soonest.
So I really would not discount Tesla as a bit player. The dinosaurs didn't last forever, and neither did Rome. It is the game changers like Musk that will likely, and thankfully, drive one or more of the Detroit dinosaurs into extinction.
Musk's record speaks for itself, and I hope that you are correct. And your dinosaur comment is true, but it would be far easier for Nissan or Toyota, for instance, to replace any Big 3 loss. Regardless, by the time Tesla is producing a more cost-friendly EV, there will be many other players competing with Tesla, players that have decades of auto-manufacturing experience.
And, to be quite honest, I think Musk missed on this one. I'd say Shai Agassi and Project Better Place is much more innovative idea for the electrification of the automobile, offering a much better dinosaur killer.
Still, I'd love to eat my words and see Tesla produce a million EVs per year some time in the future.
"you will get nothing, and like it!"
The entire company of Tesla is stupid. Make a everday car, not a freaking electric sports car. If people want a sports car and can afforf a Tesla Roadster, then they can afford a Corvette. And they dont have to spend 10,000$ to replace the stupid batteries every 10 years. Stupid idea.
big nasty-
tesla was never focused only on sports cars, they just figured that was the best entry point into the EV market for a startup. building such vehicles would help develop manufacturing processes and supply chains over term. that knowledge and experience could then be utilized to develop more efficient vehicles.
cheap cars require economies of scale, especially when you are talking new technology. that means hundreds of thousands, if not millions of vehicles, are required.
a startup could never achieve that level of manufacturing.
Post a Comment
<< Home