Federal Loans For Tesla Motors?
12/01/08 09:49
The New York Times announced today that Tesla Motors, the pioneering Silicon Valley electric car company, wants a $400 million (1.6%) slice of the $25B federal government loan program for building efficient cars. We think the government has no choice...
Why? Because Tesla has already done with $145 million what Detroit, Japan, Korea, Britain, Germany, Italy and France couldn’t after spending billions: Build a reliable electric vehicle that goes 240 miles between charges.
Let’s look at the facts: For better or worse, The Federal $25B has already been committed so this is only a referendum on where the $25B gets invested.
If Tesla does not get a slice, it means our government has rewarded failure: Detroit gets a $25B advantage for failing against an American startup that has proven its capability.
If Tesla gets a slice, we think it will invest it better than Detroit because its management and owners are deeply personally invested in the company. And (unlike Detroit) they have the wallets to ensure Tesla becomes successful and pays back its loan.
That’s not to say that we don’t have some doubts about Tesla’s business plan. For example we think San Jose California is far-too expensive place to build a new car factory for the lower cost second generation Tesla Sedan. How about rehabbing a factory in Alabama or Georgia which are lower cost “right to work” states which need jobs. Nissan, Mercedes and BMW picked this right and Tesla can learn from them.
If the government is going to make $25 Billion in loans, we think putting less than 2% into a non-Detroit company is the smartest place to put the money and it will a crying shame if it rewards failure while ignoring success.
Let’s look at the facts: For better or worse, The Federal $25B has already been committed so this is only a referendum on where the $25B gets invested.
If Tesla does not get a slice, it means our government has rewarded failure: Detroit gets a $25B advantage for failing against an American startup that has proven its capability.
If Tesla gets a slice, we think it will invest it better than Detroit because its management and owners are deeply personally invested in the company. And (unlike Detroit) they have the wallets to ensure Tesla becomes successful and pays back its loan.
That’s not to say that we don’t have some doubts about Tesla’s business plan. For example we think San Jose California is far-too expensive place to build a new car factory for the lower cost second generation Tesla Sedan. How about rehabbing a factory in Alabama or Georgia which are lower cost “right to work” states which need jobs. Nissan, Mercedes and BMW picked this right and Tesla can learn from them.
If the government is going to make $25 Billion in loans, we think putting less than 2% into a non-Detroit company is the smartest place to put the money and it will a crying shame if it rewards failure while ignoring success.
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