• Sep 26, 2011
On September 23, the Republican-controlled U.S. House of Representatives voted to approve (291-in-favor, 27-against) a stopgap bill that cuts $1.5 billion from the Department of Energy's Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. The bill, say the Democrats who opposed it, could result in the loss of up to 10,000 jobs and put up to ten automotive companies in jeopardy of losing out on funds needed to develop advanced technologies.

Tesla Motors, an automaker that received a $465-million AVTM loan back in June of 2009, is speaking out against the cut by listing the impact that the DOE money had on Tesla's job creation and accelerating the development of electric vehicle technology. Tesla says that the AVTM loan is helping with Model S development and the company's electric powertrain-development partnerships with Mercedes Benz/Daimler and Toyota. Then there's this:
Prior to receiving the ATVM loan, Tesla employed 400 people. Since the loan's closure, we have purchased the former NUMMI plant in Fremont, CA. With Tesla's continued expansion at its headquarters in Palo Alto, the opening of new markets around the world, and the recent acquisition of the Tesla Factory in Fremont, Tesla has added over 1,000 new jobs. We project the addition of another 1,000 in the coming year.
Tesla argues that receiving initial funds from the U.S. government was what jump-started the automaker's electric revolution. But it's apparently not enough. Reports claim Tesla is now seeking additional money from the U.S. government to "build increasingly affordable electric vehicles."


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  • 40 Comments
      EVnerdGene
      • 3 Years Ago
      give me some examples of government throwing lots of money into a private enterpise, and it becoming a successful business without government subsidy - forever Post Office ? Amtrak ? Chrysler (1980s) (2000s) ? Airbus ?
      Dan Frederiksen
      • 3 Years Ago
      seeing as they so grossly failed to appreciate efficiency in the design of the model S it is hard to hope for a more intelligent design in subsequent iteration. and whether they should be given the chance again with even more loans should depend on what sales they can manage with the model S. if that is a big loss they will most likely crash before repaying a further loan could ever be considered. I don't expect model S sales to succeed. I'd guess 3200 sales the first year. 1800 the second year. critically below needed levels. with 1000+ employees, funds will continue to drain. dumb suits will no doubt continue to rush to throw money at them but one has to assume that one spectacular loss after another will eventually catch up to finances and Tesla motoirs will fall. I cannot be certain that sales will not materialize but 10000+ consistently every year seems unlikely. I would not grant them a loan unless they demonstrate clear appreciation for the importance of energy optimization. and one that results in low cost of the vehicle. fat expensive EVs like the model S wont save the day.
        Brian H
        • 3 Years Ago
        @Dan Frederiksen
        Wotta maroon. 6600 presold. Watch what happens after the Oct. 1-2 demos of the Beta models, and the announcement of huge new projects with Toyota. Don't try and match brains with Musk, Dan. You're 2 or 3 leagues below his level.
          Dan Frederiksen
          • 3 Years Ago
          @Brian H
          hehe ye of little faith. if he jumped really high he could bite my ankle : ) as I said the demand is somewhat uncertain to me still but iirc they had a couple of thousand presales for the roadster too and now 4 years later the total global sales ever is around 1800. not per year. granted they were hit by a big recession but if they are lucky they'll hit a second wave of recession at model S launch. good thing they went for a cost optimized efficient vehicle and not a fat ass luxury vehicle that would hurt in a recession.. if Elon was actually smart he wouldn't make a 1700kg electric car that needs a 100kWh battery to go far. Elon made a classic mistake. he makes cars for himself.. a person to whom efficiency and cost matters not.
          Timo
          • 3 Years Ago
          @Brian H
          You are overestimating DF brains.
          EVnerdGene
          • 3 Years Ago
          @Brian H
          DF said: "Elon made a classic mistake. he makes cars for himself" Ya know, I said the same thing to myself a while back. 7 seats, 5 for his kids. Not the typical luxury sedan; nor a basis for an efficient vehicle.
      EZEE
      • 3 Years Ago
      Yay $465,000 per job!
        Spiffster
        • 3 Years Ago
        @EZEE
        I think a lot will be going towards the new plant and tooling it up for the Model S. Hopefully Tesla WONT fall into the UAW trap though... costs could get even more out of control, and Tesla certainly doesnt need that overhead while trying to develop affordable EVs.
          Brian H
          • 3 Years Ago
          @Spiffster
          The next "layer" of cars will be about half the cost of the S. That's been the plan from the beginning; low volume hi-cost hi-margin cars, then medium, then low.
          EZEE
          • 3 Years Ago
          @Spiffster
          Out in California though....might be tough. But wait...this is autoblog green. Shouldn't we be supporting the employees against the excesses of the robber baron ownership? Just curious...
          Spiffster
          • 3 Years Ago
          @Spiffster
          @EZEE How about Tesla offer potential employees gainful employment at fair industry wages with fair benefits that are aligned with past experience and education? This isnt the early 1900s and the UAW is no longer needed or welcome... the hard working american employees are. Why dont we get rid of the UAW, along with their overhead and excessive blue collar wages and allow MORE americans to build cost competitive products HERE in the US. Lets also give Tesla the liberty to employ those who are the most motivated and qualified instead of limiting their initial employment to only former Nummi employees. What does Tesla owe the UAW anyway? Conversely, what advantages would the UAW provide to Tesla? I only see disadvantages.
        PR
        • 3 Years Ago
        @EZEE
        And then Tesla pays back that 465,000 per job with interest. And the gov't gets all their money back, plus interest, plus sales tax on the cars sold, plus income tax on the worker's wages, plus corporate income tax, plus social security and medicare contributions, plus local taxes, etc. Plus these jobs and all their associated income continue for all the decades the company is successful. If Tesla turns out to be another Ford or Chevy and lasts for a century, that $465,000 suddenly becomes just $465 dollars per year per job. But that wouldn't even be accurate, because if successful, each one of these jobs may multiply to 100 jobs if Tesla is successful. So we are talking about LESS THAN 5 (FIVE) DOLLARS per job per year, all of which gets payed back to the gov't many, many, many times over. I'll await the inevitable posts from the folks who don't believe in America anymore to shout me down saying an American company can't succeed anymore.
          throwback
          • 3 Years Ago
          @PR
          "Plus these jobs and all their associated income continue for all the decades the company is successful." That's the key line. Will the company be sucessful? is the federal government good at picking winning companies from losers? Isn't that the role of venture capitalists? Should tax payer dollars go to support specific companies within a particular industry? This has nothing to do with America succeeding, it has to do with huge amounts of deficit spending and how long we can continue to borrow money and spend beyond our means.
          EVSUPERHERO
          • 3 Years Ago
          @PR
          throwback, the government supported oil when first it came a bubbling up out of the ground in Pennsylvania. The government supported the building of roads. Those were winners. Should we continue to barrow from China to pay for oil. The government supported NASA. Believe it or not if Tesla and the other car corps who choose to build EV's get us off oil it will do more for this country than NASA. It is the car corps who get the loans and come up with nothing like Chrysler that anger me. Someone should be educating the public about peak oil and the inefficiency of the beloved ICE and oils crippling effect on the economy. Corps with the investors blessing preach just the opposite in their benevolent commercials, keeping a large percent of the country ignorant. Yes, oil taxes to government are vast but so is the crippling prices we pay for food, and many other things shipped by truck to market. The oil corps give but they also take away. We do spend a fair amount searching vessels going in and out of The Straights of Hormuz. Investors are short term. They have no interest in what the country needs. They only want short term gains, it doesn't matter if there short term gains hurt the country or help the country they just want the investment to succeed. Investors are not good for the long term needs of the country or the people, it has always been this way.
      Sukairain
      • 3 Years Ago
      "build increasingly affordable electric vehicles." I know, how about instead of loaning that money to Tesla, the DOE simply INVEST that money with Nissan for a product that is actually exists.
        Chris M
        • 3 Years Ago
        @Sukairain
        Nissan also got a loan from this program, they're going to produce the Leaf in a factory in Tennessee.
        Jim
        • 3 Years Ago
        @Sukairain
        Nissan received a $1.6 billion loan from this same program for investments related to the Leaf, so they were able to get almost 4x as much as Tesla.
      me
      • 3 Years Ago
      If Tesla was deserving of these loans they would not have any problem getting them from the private sector.
      Spiffster
      • 3 Years Ago
      465 million wasnt enough for R&D and infrastructure, for 1 car (so far)? Damn... I do like this statement though: "build increasingly affordable electric vehicles." I am not sure what they define "affordable" as but its good to see that at least one company that received the loans heading in the right direction. I have faith in Tesla! Fisker, not so much.
        Chris M
        • 3 Years Ago
        @Spiffster
        Actually, most of that money is going to finance the production line, not R&D. Tesla could have done it without the Government loan, but it would have taken longer, and would have resulted in a smaller capacity production line, and fewer employees hired.
        Ashton
        • 3 Years Ago
        @Spiffster
        Tesla has said that in 5 years they want to have an electric car cost under 30k. Which is what they have deemed "affordable". Its great seeing Tesla grow, But I think they could have & should have done it with out asking for a dime from the government.
      Dan Frederiksen
      • 3 Years Ago
      seeing as they so grossly failed to appreciate efficiency in the design of the model S it is hard to hope for a more intelligent design in subsequent iteration. and whether they should be given the chance again with even more loans should depend on what sales they can manage with the model S. if that is a big loss they will most likely crash before repaying a further loan could ever be considered. I don't expect model S sales to succeed. I'd guess 3200 sales the first year. 1800 the second year. critically below needed levels. with 1000+ employees, funds will continue to drain. dumb suits will no doubt continue to rush to throw money at them but one has to assume that one spectacular loss after another will eventually catch up to finances and Tesla motoirs will fall. I cannot be certain that sales will not materialize but 10000+ consistently every year seems unlikely. I would not grant them a loan unless they demonstrate clear appreciation for the importance of energy optimization. and one that results in low cost of the vehicle. fat expensive EVs like the model S wont save the day.
      Brian H
      • 3 Years Ago
      Keep your eyes open for developments on/after Oct. 1, when the demo drives, factory tour, and major announcements about new projects with Toyota will occur. If you have $$, buy call options on Tesla stock; it's gonna jump big-time.
      Spec
      • 3 Years Ago
      Meh. I'd rather see the money go to someone that will make an affordable EV like the Nissan Leaf & Chevy Volt. I don't think funding companies that make high-priced EVs is a good use of government money.
        Spiffster
        • 3 Years Ago
        @Spec
        GM and NIssan have been given plenty. Why not fund a new american company that exclusively develops and manufactures EVs? Tesla doesnt depend on the DOE loans to survive but they certainly will help to accelerate the delivery of an affordable EV... eventually. You may be thinking of Fisker, they have absolutely no intentions of making an affordable EV for the masses and are therefor undeserving of any federal loans.
          Spec
          • 3 Years Ago
          @Spiffster
          I don't think Tesla would survive w/o government loans. They might not survive with government loans. They got nearly half a billion dollars and they are already asking for more? I like these government programs to advance EV technology and that is exactly why I'm worried about someone like Tesla. They don't have gas & hybrid cars to help carry the company as the EV markets grow. No one knows how long it will take for the EV market to grow . And the existing major manufacturers may just walk all over Tesla the way GM and Nissan effectively killed little EV maker Think. So . . . imagine what it will be like if Tesla gets another big loan and then eventually goes bankrupt such that the government loses nearly a billion. That will make it almost impossible for these programs to continue. Why should the government dump money into a company largely owned by a guy who is not willing to put more of his money into it and is instead shooting rockets off into space? That will destroy the green-energy loan guarantee program.
          throwback
          • 3 Years Ago
          @Spiffster
          "Tesla doesnt depend on the DOE loans to survive" You're joking, right? Do you honestly think they could have gone public without the loans?
          Timo
          • 3 Years Ago
          @Spiffster
          Yes they would survive without. Progress would have been a lot slower, but they were already making money with Roadster and drivetrain sales when they got their first loan. They will certainly make money with Model S (over 6000 reservations already, closing 7000 before end of the year, 500+ of those are ~$90k signature series cars). Money they have got and used this far has gone for development and infrastructure expansion (more stores, the factory, factory line buildup etc.). Remember that it is a loan, not some bailout money or subsidies. It's whole purpose is to accelerate development of viable companies. They would not get it at all if they couldn't show that they are viable company. Reason why Think died was that they build an glorified golf-cart that cost five times normal car. You can't compare Tesla and Think, they are selling totally different kind of cars.
          Marco Polo
          • 3 Years Ago
          @Spiffster
          @Spiffster "Why not fund a new American company that exclusively develops and manufactures EVs?" Simple! It would need continuous government support and never be financially viable. EV technology, is only one part of the dynamic of automobile manufacture. To mass market automobiles requires huge investment and a range of engineering and corporate skills that take years to assemble and need a wide variety of models to compete in the market place. That's why small auto-manufactures stay in the small, luxury end of the market. Tesla has done a remarkable job, but it remains to be seen if it can make the transition to mass manufacture. There is a reason that there hasn't been any new volume car makers in the western world for over 80 years. It's because automobile manufacture is only marginally profitable. The government would have done better to sell Chrysler to Elon Musk on favourable terms.
      Arun Murali
      • 3 Years Ago
      So on an average creating an American job costs about $200,000 to $400,000 investments per person. About Tesla itself, nothing against them. Hope they successfully launch the S and we are quite close to seeing a Auto Startup work for a long while now. Otherwise we will be stuck with the likes of GM needing bailout.
      Spec
      • 3 Years Ago
      Here is why I'm am extremely worried about giving Tesla more loan guarantees: http://money.cnn.com/2011/09/28/autos/tesla_business_plan.fortune/index.htm
      EVnerdGene
      • 3 Years Ago
      Tesla did not need the DOE loan. With a good business plan, business model, and management; they could've raised the money in private markets. Obviously, private markets agree. Tesla has never had a problem raising money. - - - In Frisker's case, probably helped them raise private money - seeing uncle sugar investing. uncle sugar should really stay out of private markets and picking winners and losers, and flushing money down toilets - like Solyndra
        Dan Frederiksen
        • 3 Years Ago
        @EVnerdGene
        because Bush is an idiot, is that proof that governments should not exist? your logic is flawed. gov most certainly should pick winners. their failure is who and how, not the task. battery electric car is the obvious winner and the support should be extreme. it should however not be awarded to unintelligently engineered vehicles like the model S or X. their poor weight and aerodynamics (although model S may have decent aero) being the decisive failure. gov should ensure a spectrum of hyper cars, either loan/incentive or start fabrication on their own. further it should educate its ignorant populace with extreme prejudice such that the adoption of efficient cars is not subject to miraculous awakening of the retarded masses. and then some. the incompetence of mankind in large scale self governance is spectacular. well beyond suspicion.
          Jim
          • 3 Years Ago
          @Dan Frederiksen
          While the Model S' curb weight of 3825 pounds is significantly higher the the Nissan Leaf's 3354 pounds, the Model S is a much larger car. The Model S is more similar in size to a BMW 5 series which also has the same weight. While one can argue that the BMW 5 series is a bit porky, it seems disingenuous to claim the Model S is unintelligently engineered due to its weight and aerodynamics (the coefficient of drag for the Model S is 0.27 which is comparable to the 0.25 of a Prius). Regarding politics, I prefer the government to set goals or benchmarks, e.g. >50mpg by 2020, than to specify certain technologies. Innovation typically comes from people or organization trying to solve a problem in a non-obvious way. By setting goals instead of pathways, these innovations and advancements are more likely to occur. Additionally, specifying a certain technology as the "obvious winner" puts all of our eggs in one basket which kills innovation in competing areas and increases risk of failure if the chosen technology reaches a roadblock (raw material supply issues, technology limitations that cannot be overcome cost effectively, geo-political issues, new environmental concerns...). I also have more faith in the average person. While I also am disappointed and frustrated at comments and actions by some people, I am also encouraged by the large numbers of people I work with and meet socially. I would much rather entrust the governance of this nation by the people (good and bad) than by a dictatorial or elitist small group of "gifted" individuals that you seem to desire. Each to their own.
          EVnerdGene
          • 3 Years Ago
          @Dan Frederiksen
          sounds like socialism to me but I always thought DF was a government bureaucrat stuck in a little cubicle somewhere communism - socialism at the aid of a bayonette
          Dan Frederiksen
          • 3 Years Ago
          @Dan Frederiksen
          Jim, seeing as the US gov does nothing of consequence you have what you desire. rule by ignorant masses. behold the result. were it not for a handful of people it would be even worse. electing intelligent people is hardly a dictatorship. but as I have also said, a big part of that intelligent leadership should be the education of the people. a few brilliant ruling a mob of morons is not a stable situation. a society will be a product of the quality of the people. but the few can move them to be better.
          throwback
          • 3 Years Ago
          @Dan Frederiksen
          Dan your assumption that the federal government should be picking winners and losers assumes they are capable of predicting the market. Besides the fact their track record is spotty at best, it's not within their purvue to do so.
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