"he seems deeply affected that others are so much against him, especially when they aren't playing fair"
How exactly is Tesla playing fair? Did all car manufacturers receive a $500 million loan to build electric cars or something?
How exactly is Tesla playing fair? Did all car manufacturers receive a $500 million loan to build electric cars or something?
In any industry where there are powerful incumbents and extremely high startup capital costs, the startups often need to be given outside assistance (i.e. government subsidy in the form of a loan) to have a chance of competing with their innovations. This is not ideal, but it is a necessary evil.
Furthermore, the incumbents had plenty of chance to innovate. What many of them did instead was to go bankrupt and ask for bailouts. Tell me: would you trust these companies with another $500 million of taxpayer money? It's like giving more stipend to a child who has proven irresponsible with money.
This is quite astonishing. A few large American car companies with large pension liabilities needed the subsidies (I would have let them failed and let more efficient car manufacturers take over their assets, personally). Every other large manufacturer didn't need subsidies.
"Furthermore, the incumbents had plenty of chance to innovate."
The combustible engine is more efficient than ever. We're getting many more miles per a gallon of gas than we ever had. The efficiency of the engine has done much, much, much more than electric vehicles to curb carbon emissions. Going forward, making the combustible engine and hybrids more efficient will do magnitudes more to curb carbon emissions than all-electric vehicles.
Yeah, but only because they are far more common.
Going forward, making the combustible engine and hybrids more efficient will do magnitudes more to curb carbon emissions than all-electric vehicles.
Only if you operate under the assumption that electric vehicle usage won't become more common.
Simply stating it as fact does not make it true.
Did any other manufacturer build a car like the Tesla Roadster? Any medium to large manufacturer could have done that, noone did. So as a government I'd be wary about the true intentions of those industry players who didn't want to touch electric cars in the past decades, too.
I find it quite outrageous that we're enriching well-connected billionaires and millionaires, but what do I know?
"And as time has shown it was a right"
Not really. Taxpayers are still on the hook for $7,500 for each Tesla sold.
"smaller" was in reference to Honda, Toyota, BMW, and Mercedes. You can substitute Bright Automotive if you wish.
I know that's the model in the US banking now. Didn't realize that it works for car manufacturers too.
Your objection, when applied to the specifics, would seem to make Tesla "ucompetent" and folks like GM both competent and untainted by government support. This thinking has some problems.
I didn't say that, but I would note that talking about established industries which do not benefit from government intervention in some way is a bit like the dumbed down problems we used to get in high-school physics, where we could just ignore things like friction or inertia when it was convenient.
In the real world, all our industries have a relationship with government. It's fair to say that you don't think a new entrant with a seemingly good idea should receive any subsidies like the DOE loans, but what you're really saying is that we won't level the playing field to neutralize the effect of subsidization of the existing players, and there will consequently be less competition.
> More efficient combustible engines however are doing that, despite the lack of subsidies.
This is the kind of thing I'm talking about. The companies making those engines - American, German, Japanese, Korean, whatever - are subsidized and supported by their governments. The companies making the fuel are similarly entwined with government. It's not a comparison that should cause a libertarian-minded person to immediately want to pick on Tesla specifically, which is why this line of argument strikes me as so odd.
> Tesla is certainly not curbing carbon emissions.
Certainly. Yeah...
A consumer market is not always great when you want to make new things, because both consumers AND current manufacturers will say they are happy with what they have, and won't see your initiative like a good thing. Consumers absolutely can't have a say in anything because they're not educated and they're financing big existing groups.
Money acts as some sort of vote, that's not very hard to understand.
> hey here you have money so you can compete with competent guys using their money!
It's a loan, it's not like tesla stole money. To top it off, it was reimbursed 9 years early. What can you be angry about ? That businesses as usual are not given loans by the government ? Imagine the chaos it would create. Government is just stimulating innovation, it works, and now it's like the soviets are rigging the game. The invisible hand is a theory, not a proven thing that always works in practice.
"Tesla repay a big federal loan a few weeks ago, many years before they had to?"
Why does this matter? They were given a large loan. That large loan gave them a large runway to have one profitable quarter, which allowed them to pay back the loan by issuing shares and bonds. Another car manufacturer couldn't do the same if you gave them $500M loans? Why should Tesla get it and not others?
Do the incantations "disintermediate all supply chains" and "disrupt all mature industries" suddenly lose all their magical HN mojo when confronted with the Kryptonite of the car industry?
A not insignificant portion of GM/Chrysler's restructuring costs were buyout payments for dealers, many of whom were not profitable.
Who forces car manufacturers to go through a dealer network? Or rather, who forbids them from selling direct to the public? Doesn't that constitute unfair restraint on trade?
I'm serious here. (Non-American speaking.) Is there some law that mandates that cars can only/must be sold through dealers?
Maybe it actually protected consumers three decades ago, but now, consumers have access to more than enough information to make those kinds of decisions for themselves.
Aren't the incumbent manufacturers the ones who lobbied for those dealership laws in the first place, to raise the bar for entry into the market place? (And if not, haven't they had year with piles of cash beyond our wildest dreams to buy off legislators and get the law changed?)
I am perfectly happy to have the federal government give out loans to startups to disrupt stagnent industries. Can you imagine how our ISP industry would be doing if, instead of passing laws which make it impossible to disrupt, the US government was occasionally throwing half a billion at people who wanted to try? Granted, Elon Musk wasn't exactly at the 'rags' phase of a rags-to-riches story when he got his loan...
Why? Why not just let everyone sell direct?
I know this because my aunt, a respected physicist, sat on such a board. They're not throwing shit at the wall to see if it sticks; they know what they're doing, and they're not picking winners and losers, they're playing the same game every investor plays: trying to decide who is going to win or lose before it happens. Tesla got the loan because they won it. Which is fair to the same degree as any other investment process. Unless, that is, you have some additional knowledge of corruption in the review process.
Solyndra should have proven that the government cannot "pick winners and losers" even if it wants to -- as long as the government isn't the primary player in the market, which is unfair, but also isn't what happened with Tesla.
Or GM, for that matter.
As for dealerships, the reason Tesla doesn't have to go through them is because they don't have any preexisting agreements with the dealerships, in the same way that, for example, someone who agreed to take out a student loan has to pay that back, but someone who didn't go to college, or went to a cheaper school, doesn't have to. There's nothing unfair about that either. Sure, dealerships are a pain: let's drive them all out of business, please. I'll be first on board.
The government should be in the venture capitalist business funding companies based on the recommendations of the board of People Who Know Things, now?
"As for dealerships, the reason Tesla doesn't have to go through them is because they don't have any preexisting agreements with the dealerships."
Other smaller car manufacturers are having to go through dealerships, even with zero pre-existing relationships. Why should Tesla, which has a market cap that far exceeds those aforementioned manufacturers, get special rules?
They shouldn't. Remove dealership requirements for all manufacturers. I think that's pretty clearly what Tesla is arguing for.
Sure. Why not? I want the government to stimulate innovations in places that need it.
If you wanted to curb carbon emissions, there are many more efficient ways to do so.
As far as curbing carbon emissions goes, there are a lot of irons in that fire, both public and private. No reason to place all your eggs in one basket. There are a lot of reasons to publicly support new innovations in EVs. It's a very high-profile field, and Tesla is doing a fantastic job of showing that EVs can be fun, pleasant cars. Putting the money into academic research isn't going to generate nearly as much public interest.
I don't believe you. Show me some evidence that they have to, and that they're not merely choosing to.
https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/Cha...
Subsection (6):
>[It shall be a violation...] to offer to sell or to sell any new motor vehicle to any person located in the commonwealth, except a distributor, at a lower actual price therefor than the actual price offered and charged contemporaneously to a motor vehicle dealer located in the commonwealth for the same model vehicle similarly equipped or to utilize any device which results in such lesser actual price unless the same is available on equal terms to all dealers located in the commonwealth; but this paragraph shall not apply to sales by a manufacturer or distributor to any unit of the federal government or any agency thereof or to the commonwealth or any of its political subdivisions.
As written, this clearly applies if and only if Tesla already sells cars to dealers, and furthermore similarly to other independent car manufacturers, electric and otherwise.
Is it a bad law? Yes. Does it hurt the incumbents? Yes. Is it biased in Tesla's favor? No. Is it giving Tesla special treatment? No.
Business plan, business model, customer research, advances already made, further along, ... There are dozens of possible reasons to loan $500M to Tesla, but not to another company.
There are dozens of possible reasons why you would loan $1000 to one friend, but not to another. Someone else wouldn't know those reasons, but if the friend complained about you being unfair, you would be quite miffed if someone went on the internet complaining how unfair you were, based on treating two people differently, without considering that maybe these people actually are different.
These companies may be alike in trying to sell an electric car. That does not make them comparable for the purposes of giving them a loan.
It's quite funny that these Tesla Roadsters are being bought by rich Americans, and being subsidized by average Americans, and yet there seems to be no outrage from those purportedly upset about inequality. The average American isn't benefiting by enriching billionaires and millionaires with their $100,000 roadsters.
The end goal of the loan was not to make Elon richer or enable Tesla to sell a few thousand cars to "billionaires and millionaires". It was to support a company that had demonstrated a plan that looked reasonably viable for building up the EV tech to the point that it can become a mainstream replacement for ICEs. The incumbents have not shown as much interest or drive, and the initial attempts by them at delivering EVs have not seen the same level of adoption and excitement from the public. I believe that this lack is due to the less efficient manner they are going about it: trying to retrofit EV technology into the ICE world.
I am certainly not a millionaire. I am above the salary level of the average American. That meant that it was possible for me to save up and purchase a Model S. Based on my experience of owning it and my research of the company, I believe that this is the future and I believe that $500m loan was not simply a capital venture or investment but rather that it was very much a benefit to the average American because it will enable a third generation of EVs to enter the mainstream.
I believe the established companies see that plausible future also and are fighting as hard as they can with lobbying and lawsuits to prevent being overshadowed by it.
http://en.wikipedia.org/wiki/The_General_Theory_of_Employmen...
We've come a long way since the 1930s, haven't we? Yes, the government can do these things, and -gasp- it works, on a small scale, under certain conditions (economic depression).
The "$500m subsidy" to Tesla costs taxpayers zero after being repaid -- but represents a loan from the median taxpayer of about, oh, I dunno, seventy-five cents.
But yes, now that you've successfully moved the goalpost, I might have to revise my estimate of seventy-five cents.
You're complaining about "government picking winners and losers with taxpayer money". The loan isn't a waste of taxpayer money. The subsidy isn't picking winners and losers. Taken together, these two things do not provide weight to your claim: Tesla is not a messiah of the government on the wings of the taxpayers. Or, at least, you have failed to demonstrate that.
I didn't get a loan to build an electric car, and I might have tried if someone gave me $500 million. HOW IS THAT FAIR?!?!?!?!?
Life's not fair. Better you get used to it and take every advantage you can get.
It's not like it was free money anyway. It still was a loan and had to be paid back. You're acting like the US government would have gifted that money to Tesla.
Also, the government would have gifted them the money regardless of their ability to pay it back. Fisker couldn't pay back theirs, as did many other energy companies that went bankrupt. No one was arrested and no personal assets were taken.
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back in my country we have our own electric car company, which have been able to do the thing, but they havent been able to get people support.
Musk was able to do that.
Wow.
There were quite several car manufacturers similar to Tesla's size before their large taxpayer-subsidized loan who didn't get those loans.
I guess you must be a well-connected billionaire to qualify. I guess that counts as "fair" nowadays.
I find it difficult blaming Tesla for doing what it can to catch up in an industry where the established players have a huge advantage.