Tesla says federal loans needed for Model S sedan
After yesterday's good news regarding delivery of the 100th Tesla Roadster, it's back to number-crunching reality. Tesla CEO Elon Musk told the Detroit Free Press that if the electric car maker doesn't get a $350 million loan from the government, then the Model S will be delayed and San Jose plant won't open. Just two weeks ago, Tesla opposed the Big Three getting any bailout money from the government. So, Musk's statement may seem contradictory, but it's not. We just need to look at the details.
Tesla's Vice President of Business Development, Diarmuid O'Connell, blogged about how it was a bad idea for the Big Three to get money that had been set aside in the December 2007 Energy Independence and Security Act (EISA), specifically Section 136. Section 136 set up the Advanced Technology Vehicles Loan Program (ATVMLP), and Tesla opposed taking money that was supposed to make cars cleaner and instead use it to just keep the Big Three operating. Now, Tesla is asking for some of those Section 136 green car funds, something that the New York Times columnist Randall Stross doesn't want. Musk said that if the government shells out the $350 million, Tesla could sell 20,000 electric sedans a year by 2011.
[Source: Detroit Free Press]
Reader Comments (Page 1 of 2)
Richard 11:45AM (12/10/2008)
Tesla is the only serious company that is trying to make a dent in the pollution crisis. The "Big 3" have squandered their opportunities and now need funds reallocated from the proper allocation to their selfish needs. If the big three get funding, Tesla, is more deserving of this smaller funding. Really, Tesla is only asking $350 million, as opposed to $17 billion by two others! WTF? Tesla has product in development. The big three don't. The Volt doesn't even count. It's not even a decent product. 40 miles is NOT practical, and gasoline is still the backup! And, they need $350 million to make it marketable after the considerable amount they've already. WTF?
Reply
Keith Wakeham 12:10PM (12/10/2008)
In the current situation GM moves 160 000 vehicles a month, down from near 300 000 a month, that's easily 3 million a year. Tesla has delivered there 100th! So on a car per car basis the big 3 wants less than 5000 dollars for every car they produced in one year(much less because this has been cumulative issue for years)! Tesla wants 3.5 million for every car its produced to date. Who will affect the working class more.
My money is on giant corporation that affects millions of people indirectly from suppliers to energy. Tesla is a dot on the surface of the earth and just because they have a lot of press surrounding a sports car doesn't mean they will change much. Model S is a 60k car. High class, and not middle can afford that.
Richard 12:45PM (12/10/2008)
The problem is that the big three still don't have a viable efficient car on the drawing board. Despite your "cost per car" rationale, the truth is that Tesla has a product that uses sustainable energy. The big three are still producing gasoline powered cars! It's business as usual for them. I say let them die and reorganize. Many companies fail each year in America and throughout the world. Government doesn't step in to help every one out! The truth is that the BIG 3 haven't read their cards well. They now want the people to bail them out. The irrational argument that Tesla's products are for the wealthy doesn't hold water. The Volt is going to cost over $40K. Who can afford that? Some people can. As some people can afford a $60K car. As some people can afford a $100K car. The issue here is also political stability. The less oil we consume, the less America (and the rest of the world, for that extent) will be susceptible to mall-aligned deed doers. The big three still perpetuate this scenario by making "old school" gas guzzling SUV's and cars. This is what you propose we should support? Not if I were in charge. I've had my setbacks in life. I've been laid off from work before. You know what? I got another job. I moved on and found something that worked for me. Out of the big three, only Ford has an all electric car in the works. The other two need "time" to develop them. Oddly enough, Ford was the only one that didn't need any money! Goes to prove how the other two certainly shouldn't be supported. This makes you wonder what happened to all the research they did on electric cars in the last decade.
History has shown that you invest in product development, and prices come down after. Tesla's Model S, although still out of my and many other's price range, will provide the path to more affordable products. GM and Chrysler don't have similar products to talk about. THAT'S the difference and the very reason Tesla, and others like them, should get government support before the BIG 3(losers).
oldraven 12:47PM (12/10/2008)
The D3 don't have any products in development? Is it hard getting the sand out of your ears every night?
oldraven 12:52PM (12/10/2008)
Sorry, you replied again after I posted. So, by your model, the Prius is not a viable automobile because it still uses gasoline. In case you haven't noticed, there are a few more cars on the road that burn fuel than there are EVs.
Tesla makes niche cars, not volume cars. With the current economy and once again cheap gas, it's the Roadster and Whitestar that aren't all that viable anymore.
I'm all for EVs, but I'm much more for reality.
oldraven 12:11PM (12/10/2008)
Tesla has built 100 cars so far and they think they deserve funding? They've been in production a little over a year and they've already had lay-offs and are threatening a plant closure? Their start-up has had a revolving door for management and lawsuits since its very recent inception. If they go down some HUNDREDS of jobs may be affected.
Get real.
Reply
Richard 1:12PM (12/10/2008)
The funding isn't for the Roadster. It's for the new model. GM wants help for their wasted spending habits like personal Jets, overpriced compensations of high ranking officials, wasted perks, outdated dealership models....
oldraven 3:55PM (12/10/2008)
Wrong again. They've already expressed what they need the money for, and it's not for anything you just typed. Really, man, this is AutoblogGreen. It's not like this information isn't readily available to you. It's up to you to hear it.
Nudger 6:41PM (12/10/2008)
Classic Silicon Valley hubris from the people who found a prize at the top of the first crackerjack box they opened, and mistook that for genius. Building millions of reliable cars (or launching a rocket that works) takes hard, detailed systems and process engineering - something Tesla has in no way demonstrated that it understands.
For all you knee-jerk supporters of revolution over evolution - remember that we handed the keys to our financial infrastructure to some highly innovative entrepreneurs (CDO's anyone?), and locked the systems thinkers away in powerless regulatory agencies. If you like where that got us, you'll love what they will do to our physical and technical infrastructure. So kill GM and Boeing and and put your trust in the people that build Pay-Pal and eBay.
For more on Tesla vs. GM as a proxy for entrepreneurs vs. systems thinkers, have a look here: http://blog.vanno.com/index.php/2008/11/23/tesla-gm-and-a-national-cto/
Reply
Duodenum 12:26PM (12/10/2008)
Tesla should not get federal funding. They're not yet and never have been a viable company. They don't have networks of dealers, service departments, parts, suppliers, manufacturing, financing, etc. that the Big Three do. If Tesla goes out of business, nobody will notice. If the Big Three go down, it'll grievously harm the economy.
Reply
Richard 12:56PM (12/10/2008)
All this argument shows how much the consumers have been duped into buying their crap. Oh, all those dealers and complicated service and sales structure sure hasn't done them any good. They are still asking for A LOT of money. Money that was already allocated for companies like Tesla. It's obvious that although you feel that layoffs at the big three is tragedy, but layoffs at Tesla isn't. Hypocrites.
Look, all Tesla is asking is for funds that were appropriated for new technology. The big three want handouts because they couldn't properly mange their business.
oldraven 4:04PM (12/10/2008)
Richard, are you telling me that Telsa needs the money because they DID properly manage their business? Have you actually read anything about the soap opera otherwise known as the Telsa star-up?
BTW, if a $40k EREV is too expensive for the average joe, how is a $70k EV not, let alone a $109k two seater?
http://www.autobloggreen.com/2007/05/10/actually-that-tesla-whitestar-might-cost-you-70-000/
Andrew 6:04PM (12/10/2008)
Actually Richael the Tesla Model S (code name whitestar) is going to got $49,999 after the tax break that congress already passed. http://www.greentechmedia.com/articles/tesla-coughs-up-sedan-price-details-on-economy-car-5344.html
EVFan 8:10AM (12/11/2008)
Andrew,
That $49,999 price you talk about is a projected price on a car that doesn't exist. You, nor I, have no idea what the "actual" cost will be when all is said and done. What all of this will show is how good Tesla is at lobbying congress.
why not the LS2LS7? 12:38PM (12/10/2008)
It's not contradictory. Musk wants his hand outs, and of course he sees he's competing for government handouts with the Big 3. He'd rather the money go to him than them.
A little birdie told me the Model S has only 60% the range of the Roadster. I think that person was over optimistic. But either way, are people really going to buy a car that only has 160 miles range (less if you fill it with people)? I dunno.
I'm not stating it doesn't have a use, just that a lot of people won't buy a vehicle that doesn't greatly exceed their needs, because they think they need that much car.
Reply
Richard 12:56PM (12/10/2008)
I only drive 40-75 miles a day. So, yes, if I could afford the car, I would buy it. It's exactly what I need. If I "need" to go further, I'll fly, or, I'll rent a car! I've already changed my way of thinking, and don't see any problems with 160 mile range. I'd actually take 120, or even 100 mile range. Of course, this range is not suitable for every need out there, as isn't every car and truck off the assembly line. But, I'm just playing a broken record here.
why not the LS2LS7? 1:50PM (12/10/2008)
That's one sale.
But there are a lot of people who aren't like you.
Heck, my relatives in the Midwest don't even understand that hybrids run on gas.
Most people have not shown a great willingness to buy a car with this range before.
BoneHeadOtto 10:11AM (12/11/2008)
most people have not been receptive to cars with such a small range, because range is not the issue. Trips to the gas station are the issue. But with electrics you fill up at home. So as long as the range is sufficient for their 99% daily needs, then these cars will sell. I rarely travel more than 100 miles in a day eventhough i have a long commute. We have the minivan for road trips. Or if we really wanted to we could rent a car. With gas at $4 our family spends about $400 a month on gas. With one electric in the family we would likely cut that in half and only use the van for road trips.
Throwback 12:58PM (12/10/2008)
richard, please give us a driving report on Volt. You stated it is not a good product so you must have driven it.
Reply
Richard 1:05PM (12/10/2008)
How could I have a report on a car that isn't available yet? It isn't even prototyped. But the argument isn't that a 40 mile car that costs over $40k is going to change the world. It's the fact that GM is asking for funds to run it's operations that it couldn't handle well in the first place. GM's product will still need gasoline. Period. It's not politically our best interest to continue to support gasoline based products. GM wants Over $25 billion to continue "business as normal". Tesla is asking for $350 million to develop an new, alternative fulled, car. That's a hell of a lot of difference.