Tesla Motors by the numbers
online.wsj.com
online.wsj.com
A lot of the comments on this article seem needlessly ad hominem, calling the author a "whiner" and "wicked." While I don't see eye-to-eye with every point the author makes, I think the underlying argument -- that a lot of the praise of Tesla's results so far has been under the assumption that its purely the car responsible for these profits. (The crudely phrased press release about Tesla paying back loans "before any other US manufacturer" certainly doesn't help the notion that Tesla is loosely playing the marketing game.)
It's entirely possible to laud Musk and Tesla's work so far while also being cognizant that, hey, the company isn't sterling and there's still a lot of work to be done before we consider the Tesla a success.
Instead the author seems to make the issue too simple.
1) Spending tax payer money is bad.
2) Tesla is taking tax payer money.
3) Tesla is bad.
Or to pull examples from the article.
But such a success must still be measured against other taxpayer losses and misallocated capital.
Yes, and where are the author's measurements?
Why should middle-class taxpayers whose incomes are falling still pay to subsidize the purchase of cars that only the affluent can afford, and then partly as a gesture of their superior environmental virtue? When does the rest of America get its return on Tesla's profits?
And why doesn't the author attempt to answer these questions? Of course, you could assume these are rhetorical, but again, I'm not sure why that's useful.
I don't like Tesla. A Tesla car isn't practical for me, so by extension it's not practical for most. Massive popularity and interest in buying them proves nothing about the future because I don't have one. Other electric cars failed after receiving public support, and therefore Tesla will fail. Even though nobody claims free charging is sustainable, I claim that non-existent claim will lead to failure, because it's impossible to change our current electrical infrastructure. Ever. And a decade into the future? That's crazy! We need to deal with what's in front of us for the next ten minutes! And after that, we'll do it again!
Were you so personally offended by what the person wrote that you needed to stab them for it?
That seems like a very obnoxious thing to write and was completely unnecessary. If you disagree with someone fine, say so and why, but there's no need to do that to what the person wrote. Why sink to such a level intellectually?
This is about a lot more than a rich person getting richer, and you know that. I'm a little shocked that you would pretend otherwise.
The only way forward is a step at a time, and Tesla is showing that electric vehicles can be practical and also playing their part in starting to build the infrastructure to make it practical for all. Of course the grid isn't ready now, but you better believe they are seeing the writing on the wall and adapting. The entire world isn't going to switch to electric cars overnight, nor in ten years, it will happen gradually and so will the infrastructure.
Given those stated goals, how does your impression change?
I think your argument holds for other EVs, but not the Model S and X and the lower-end car that is on the horizon. These cars have 200+ mile range. 99.999% of my driving is well within that range. Maybe I'm more local than most, but even in the Bay Area, that gives me a very good range of places I can go.
Is the suggestion to cease all electric vehicle R&D, marketing, and consumer adoption?
Curious.
I just visualized myself 20 years in the future, reading this I saw it as the myopic retrograde reactionary writting of a small minded man, that it is. Soon to be lost on the tides of progress.
To me, those numbers were a cause for celebration: wow, our government is actually effectively encouraging a terrific technology and company.
By the way, I agree with you; subsidies should be used to promote products with positive externalities.
I don't really want to read further, and it's only the second paragraph.
I suspect I will die waiting for that one.
It's not a few millions, temporary (incentives for EVs won't last forever), that would be at the top of my list of things to cut in a trillion dollar economy.
The underlying principle of the article seems to be one of anti-subsidy, a position which is imminently defensible in light of many problematic government subsidies. Tesla still has a lot to prove. That being said, the author failed to set up a balanced argument since he did not mention the fact that most long-lasting companies have been subsidized by the government at one time or another in their history and many at their infancy.
Did I mention that Elon Musk is freaking awesome!!!
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Plus I'm pretty sure the WSJ would be decry Tesla's stupidity if the left this money on the table. These incentives weren't designed fir Tesla, they just take advantage of them.
So keeping dinosaur companies on life support with tax dollars is a good thing?
GM was not run very intelligently in the '90s (and '80s and '00s), so I definitely feel the urge to let them die, but the economic damage of the 100,000+ layoffs would cost more than the auto bailout.
Nobody seems to care if taxi drivers lose out from services like Lyft and Uber. It's called "disruption" and is apparently good for the economy.
A dinosaur like GM loses market share to imports and the same crowd thinks gov't subsidies are required to keep an inefficient industry alive.
I’d was rather pointing out that the whole industry was so dysfunctional that if you are so much as surviving in it, you are most likely taking part in that disfunction.
First of all, Tesla is paying back its federal loan 9 years early. So all the stuff about what we taxpayers have paid for is bogus.
The carbon credits issue is brought up as though we already agree that it's wrong/bad with no discussion. I don't agree. I think it's clearly the right way to go, and other manufacturers should be moving to EVs.
The phrase "environmentalist Bjorn Lomborg" should qualify as slander against all environmentalists. He is the opposite of an environmentalist. Every step of the way he's been arguing against fighting climate change. He's a shill for the status quo, and whenever you see someone cite him, you can rest assured they are arguing for oil, coal, etc.
Tesla is about the future. Anyone without vision is going to clearly be upset about the compromises we have to make now in order to get us where we want to be.
But those people would be the same ones moaning about how much money we're wasting on NASA in 1964.
Why is it that I pay $7,500 more in federal taxes for riding my bicycle to work than someone who purchases a $70,000 luxury car? Why don't people who don't even own a car in the first place, and take the bus to work, get that tax credit? We're basically transferring wealth from the middle class to the wealthy by offering these sorts of tax credits (at least, in the case of Tesla; other manufacturers like Nissan are offering more affordable electric cars that are actually within the price range of the middle class).
By offering a tax credit to people who buy electric cars, yes, the average taxpayer is still funding Tesla.
Now, the carbon credits are another issue. I think that those are somewhat more reasonable; you are making the manufacturers of vehicles that have substantial negative externalities fund ones that have significantly less.
Again, though, I wonder why only other automobile manufacturers are able to sell these credits; it would be nice for, say, bicycle manufacturers, electric bike manufacturers, public transit systems, and municipalities which build infrastructure more suitable for living without cars to be able to sell credits as well. Only allowing automobile manufacturers to be in the game means that you are still supporting transportation that requires each individual person to haul around a couple of tons of metal with them for 20 or more miles a day, taking up lots of extra space for storing them both at home and at work, leading to congestion and the necessity for more money to go into infrastructure.
Secondly, the total cost of those tax credits is miniscule. We subsidize a lot of other much worse things a lot more. If you're going to get up in arms about tax subsidies, we'll be here all day.
Additionally, EV subsidies are not unique to Tesla. The only thing that was unique to them was the loan which they're paying back early. So bringing up the rest of it in an article ostensibly about Tesla is a bit misleading.
I think EV subsidies make sense, and I made the point of NASA for a reason. Sometimes when we have an important goal (interstate freeway, getting to the moon, moving the entire country over to electric vehicles) it's worth investing in.
You may disagree, and you can express that disagreement by writing to your local Congress critters and by voting.
Source? Everyone in this thread on the Tesla forum seems to think that you can still get the credit if you pay AMT: http://www.teslamotorsclub.com/showthread.php/9263-Is-7500-t...
And if you check IRS form 1040 http://www.irs.gov/pub/irs-pdf/f1040.pdf and its instructions http://www.irs.gov/pub/irs-pdf/i1040.pdf, you will see that the tax credit for electric vehicles is added to line 53, which is subtracted from your tax liability whether or not you paid AMT (line 45). AMT applies to taxable income, preventing you from claiming exemptions if your income is over a certain amount. Tax credits apply to your tax liability, which are subtracted after computing your tax and alternative minimum tax.
So yes, you get the tax credit no matter how wealthy you are.
> I think EV subsidies make sense, and I made the point of NASA for a reason. Sometimes when we have an important goal (interstate freeway, getting to the moon, moving the entire country over to electric vehicles) it's worth investing in.
I agree that EV subsidies are worthwhile, but I think that there are better places that we could apply subsidies, such as all of the other infrastructure improvements I suggested, and promoting low-car lifestyles rather than pouring all of that investment into alternative types of cars. But those other improvements aren't as sexy, because they frequently don't involve exciting new technologies but instead simple restraint, better planning, and investment in things that are associated with lower classes (busses, trains, dense urban planning), rather than upper and middle classes (sexy cars, suburban living).
And you know, another way for me to disagree is doing exactly what I'm doing here; trying to urge restraint of many people who think that Tesla is so amazing and so much the future that they lose sight of other, simpler, cheaper ways of solving the problems that Tesla is supposedly solving. There are an awful lot of people here who equate negative opinions of Tesla with being evil, backward thinking, luddites, while really, some people are just asking "is Tesla really profitable (as paying off the loan early might make you believe), or are they still making money off of the taxpayer and zero-emission credits paid for by other manufacturers? How long should the taxpayer fund toys for the wealthy in order to help bootstrap an EV manufacturing industry, as opposed to putting money into other, even more sustainable infrastructure improvements?"
I am sure that lots of people did moan about the money spent on NASA in the 60s and I am also sure that at least some of that money was 'wasted' (i.e. spent inefficiently). We should all be concerned about these kinds of issues, even if we like the programs.
Of course, I'm not saying there aren't better ways; I'd be curious what you might suggest?
And exactly what form should this concern take? Require a ballot initiative on every expenditure over $10,000?
Let's be realistic here.
Whenever you're doing something on a huge scale there are going to be inefficiencies and problems. We have to accept them up to a point.
Now that $8 billion that went missing in Iraq? That's probably something worth being up in arms about.
The small amount of money we're spending on EV credits? Not wasteful and not worth freaking out about. That program is working exactly as intended.
If we're talking about this program in particular, the Energy Department had the following to say: "losses in the $34 billion loan portfolio amount to about 2% of the total."
Even if that 2% is wrong, a loss of even a few billion compared to the entire portfolio of lending is minimal.
Now I'm not going to suggest that all government loans work, as picking winners in the private or pubic sector is very, very hard. But please before regurgitating a statement please back it up with some evidence or reporting on the matter.
WSJ content is behind a paywall. WSJ opinion pages are free. If you're a capitalist, and believe goods fetch their market value, that tells you all you need to know.
"Taxpayers pay first so Tesla can build the cars and again to help the wealthy buy them."
It turns out that anyone subject to AMT (my guess is a substantial portion of Tesla buyers) does not in fact qualify for the federal tax credit.
http://en.m.wikipedia.org/wiki/Survivorship_bias
It's quite telling that you're ignoring the billions/trillions we've wasted on useless projects since 1964.
Because it's not relevant to the discussion.
Seriously, read it in Anton Ego's voice. It's fantastic.
Obviously completely short-sighted and narrow minded, as is expected from the WSJ. Move along, nothing to see here.
Currently, your post is at DH1 (http://paulgraham.com/disagree.html). What point in the article do you disagree with and why?
For example this news piece claiming WSJ numbers are up after Murdoch took over: http://www.businessinsider.com/wall-street-journal-readershi...
I'm not saying the news story is accurate, but it does contribute to the conversation whereas the parent comment and yours do not.