Tesla needs government loans to produce Model S on time
Detroit isn't the only place in the U.S. where struggling automakers are looking for government handouts. Tesla Motors, Silicon Valley's one and only auto manufacturer, is looking for an initial injection from the government of $350 million, which is slated to fund the development and necessary manufacturing facilities for its upcoming Model S sedan with another $200 million to produce lithium-ion batteries plus $100 million to expand its growing drivetrain business. It's still early, but we're pretty sure that equals a cool $650 mil. Like the $15 billion that the Detroit 3 are still hoping to get within the next few days, Tesla's $650 million would come from the $25 billion investment in green technology that Congress has already approved for American automakers. Without this infusion of capital, Tesla Motors' CEO Elon Musk claims that its battery-powered sedan, which is expected to bow sometime next year on conceptual form, will be delayed by a few years until the economy recovers and more capital investment can be raised on its own.
[Sources: Detroit Free Press, Bloomberg, Photo by Vince Bucci/Getty]
Reader Comments (Page 1 of 3)
ack154 12:36PM (12/10/2008)
Great precedent we've set now...
What? Your business can't survive on its own? Ask the government for money!
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Randy 1:03PM (12/10/2008)
I totally agree! I absolutely oppose this. Their survival does nothing for the people as the Big 3's does! This in my opinion would be an absolute waste of tax payers money! As well, I'd be pretty pissed off if anyone gave them a nickel!
If they can't start the company with their own money or a pre existing grant for the betterment of our society, let them fall or get acquired.
Last time I checked starting a business didn't rely on tax payer dollars! Go the way of Tucker I say! At least Tucker used investors... God Bless Em!
hashiryu 1:08PM (12/10/2008)
Agreed. Every body jump on the Gov't loan Band wagon!
WTF is going on?!!?!?!?
Scorch 1:55PM (12/10/2008)
Nevermind the fact that Tesla wants $650 million to produce a car that no one can afford. Its pretty unbelievable that a company that's making exclusive sports cars is asking for government money.
How does this $650 million benefit anyone in this country besides the few hundred people that actually own Teslas?
Taylor 3:39PM (12/10/2008)
@Randy
Their survival does nothing for the people? They are doing HUGE research into all-electric cars and are the ONLY company in the world that produces a 200 mile range electric car. Other companies like Mitsubishi, etc are working on small, "City only" electric cars with short range and minimal utility, while Tesla is already producing a car that is fully electric that can be used pretty much like a regular car, barring long road trips.
If the big 3 go under there are some good projects that will die, but they have only now given in and really started innovating. Tesla has been an innovator from the beginning, and their whitestar sedan will revolutionize the auto industry when it comes out.
And while I agree that we shouldn't just give everyone a handout, and Tesla also has publicly said they oppose the bailout, the bailout is happening and if that's the case, Tesla deserved the money more than the big 3, who need it because of their failed business strategies. Tesla only needs the money to speed development, not because they are broke from poor management.
-Taylor
Samurai Jack 4:28PM (12/10/2008)
Absolutely right, and it's a disgrace.
They'll probably get it though. They're not in Nancy Pelosi's district, but they can see it from there. Frellin' porkers.
Ford Wannup 10:20PM (12/10/2008)
@Taylor:
I've been a hopeful sideline supporter of Tesla. However, their incessant internal turmoils especially with the whole Eberhard mess, constant overhyped PRs followed by lowered expectations, the vaporware-like White Star, holier than thou attitude, all that just kind of confirmed Elon Musk's general douchebaggery reputation. At this rate, I have no faith that Tesla will amount to anything more than nano-niche player.
I personally oppose "bailout" for the auto ( I do support a gov't-financed pre-packaged financial restructuring), but Musk and his company should be the last entity considered for any part of gov't assistance.
Smegley 12:37PM (12/10/2008)
No federal loans for californians. They want to set their own emissions standards, so they should meet it on their own.
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Rick 1:49PM (12/10/2008)
...Without any interference from automobile manufacturers lobbying certain political parties.
Xcountryflyer 12:38PM (12/10/2008)
I need a bailout too. Just let them fold. Someone can buy the assets cheap.
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Sea Urchin 12:57PM (12/10/2008)
If you are of that opinion than all automakers should be on their own.
shadysi 12:38PM (12/10/2008)
that picture is awesome, lol
not sure about how likely tesla is to get a gov't loan.
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Torrent 12:40PM (12/10/2008)
I say give it to 'em.
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happy_penguin 7:57PM (12/10/2008)
You notice how a certain rocket had nothing to say about this? Is it possible that this is too small an issue to matter to him and his political agenda? Do you ever wonder why he never has anything to say unless it's about the "bailout" of Detroit automakers?
Torrent 8:09PM (12/10/2008)
He's the typical detroit hater.
happy_penguin 9:57PM (12/10/2008)
I think he's more than that. ;)
Jj 12:44PM (12/10/2008)
If Tesla is seeking a share of this money to be used on R&D then fine. Tesla certainly qualifies as a "green" product.
However if they are simply using this as a backdoor way of getting government assistance to get through a down economy as the old big three are seeking then sorry, Tesla, your not vital enough to the overall economy for a government bailout.
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mmstowes 12:54PM (12/10/2008)
I second your sentiments.
Dude 1:22PM (12/10/2008)
No. It's not my job to fund Tesla's R&D. If they want a Government grant to fund the research, then apply for it, but they would never do that because they want to be able to patent any results of said R&D.
Jj 1:31PM (12/10/2008)
Dude,
They basically are applying for a government grant under a program that is already approved with the purpose of furthering "green" technology in cars.
Regardless of your position on the existance that program it's hard to fault Tesla for taking advantage now that it's here.
My only concern is seeing that the money actually is used for furthering technology and not used for everyday business expences.