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Wednesday, December 10, 2008

Tesla praying for its own bailout

Tesla delivered their 100th car Tuesday, of 1200 cars on their backlog. The (presold) delivery took place at their Menlo Park dealership to a minor celebrity best known for standing next to Oprah.

However, the big news is that Tesla is seeking $350 million in low interest loans to develop its (currently on hold) plans for a mass market ($58k) four-door sedan. The parallels to the bailout of the Detroit three are unavoidable.

Despite such parallels, CEO Elon Musk rejects the analogy. As KCBS radio summarized
Tesla needs government capital, but the federal loan the electric car manufacturer wants to use to finance production on a battery-powered sedan does not come from the auto industry bailout now being debated in Congress.

The San Carlos-based company is awaiting a $350 million loan from the Department of Energy under a program Congress approved last year to encourage the development of energy- efficient vehicles.

Tesla CEO Elon Musk said that money would finance a plant in San Jose where the Model S—to be priced just under $60,000—will be developed.

He was quick to clarify the money would go towards future development rather than existing day-to-day operating costs, a crucial difference between the DOE program and the bailout of the Big Three.
So it’s coming from a different pot of money, and (perhaps) the plan predated the recent collapse of demand for consumer durables.

Certainly the Tesla funding is more consonant with existing DOE policy to encourage alternative fuel vehicles, rather than the recent tendency of Washington politicians to offer (as both left and right deride it) a “bridge loan to nowhere.”

1 comment:

Mberenis said...

Obama did it for us! There is a bailout for the people. Everyone qualifies. I got $750,000.00USD in grants for my bailout.

Claim your free Bailout Grant