This deal is being underwritten by U.S. taxpayers, who have given Tesla several hundred million dollars in loans (in exchange for zero equity). I suppose there's now a slightly better chance that some of those loans will actually get repaid...
Meanwhile, I love the idea of us selling electric power trains to the Japanese, rather than them selling them to Detroit. Makes me feel like we're doing something right.
And it isn't "us," the Germans and Toyota are equity stakeholders in Tesla.
Good for Germany and Toyota. The tech will be here, they'll be playing catchup, or explicitly neglecting their own tech because they have cheap access to ours.
Taxpayer funded subsidies are like taking money out of your wallet and setting it on fire, most of the time.
Gov't - down money Recipient - up money
Does the mechanism really matter?
EDIT: Hypothetically, let's say the government gave one company a direct subsidy, another a tax rebate, and a third a targetted one-company-only tax break, all for X dollars. You're saying these are substantially different from a macroeconomic perspective? And different enough that a few million in one method is egregious while 50 billion via another method is just how things should be?
To add to this, looking at the upside of the risk:
If the company is successful with a subsidy or a loan, they've first got to make up the raw dollar value of the subsidy (in extra taxes) or loan (in repayments) before additional taxes become an ROI.
If the company is successful with a tax break, they can start reaping rewards right away as (assuming there is some limited taxation involved), tax revenues increase with volume.
However, with either option you're still gambling with public funds and policy and there are many ways to screw the public fiscally. I'm personally against using the tax code for social engineering purposes (punitive, stimulative, or otherwise), and doubly against subsidies in nearly all cases.
like coke and hookers and yachts
I am proud to support Toyota, and the sooner the Big Three are forced to sell out out to "the japanese" the better.
It may be different for line employees, the people I knew worked skilled trades, electrician, hvac, etc.
And here I was thinking it's near-impossible to criticize a company that might finally be profitable while creating a new clean-energy car tech hub right here in the United States...
There is no reason the USG couldn't have similarly received warrants as part of the Tesla loan guarantee, or at least a pledge from the insiders not to sell stock until we had been repaid--to better put Musk and his benefactors, you and me, on the same side of the table.
Also, what do you think that future taxable income comes to, discounted to the present at a discount rate that reflects the risk/uncertainty of those cash flows?
We could pay people $400M to dig ditches or paint each others' portraits if all we want is jobs. If private enterprise can't create and sustain the need for that job over the long term, all we're doing is buying paintings from mechanical engineers.
For heaven's sake, this means Tesla may be turning in the direction of "profitable". Aren't you at least happy about that?