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If you look at their strategy, they're aiming to make profit around 2020 when the Gigafactory is at full capacity and the Model 3 is shipping at full capacity. At that point, the government subsidy expires for Tesla (100,000 cars shipped by one manu) and they make full profits on their own dime. If they were really unsustainable, nobody would be investing in TSLA right now.

The tax subsidy applies to all electric cars, and has made the Leaf and other cars in its class affordable for many Americans, which has pushed electric car adoption.

Even in the case of Tesla, there are plenty of people who couldn't afford a Tesla if it weren't for the $7,500 tax credit. It seems silly, but it's a big chunk of money, and when you're stretching your budget to afford a nice, eco-friendly and American-produced car, the extra subsidy really helps.

Tesla is opening the door for sustainable transit in the U.S., has pushed other car manufacturers to follow suit, and is creating a buttload of jobs with their domestic factory, the Gigafactory 1, their local service centers, and whatever comes next.

It is frustrating to see tax money thrown at corporations, but hey, Tesla didn't take a multi-billion dollar bailout when they made poor business decisions and were going to cost America millions of jobs. Just something to put this in perspective.

The gigafactory concept is just domestic manufacturing. It cannot change how much Lithium there is in the ground, how hard it is to get to it in these quantities, and how expensive it is to turn into batteries, etc. Its nice that Elon has his own manufacturing, but the cost savings compared to outsourcing are probably going to be trivial.

Unless he can get prices down to a 1/10th of what it costs today, he won't ever be competitive outside of the luxury market. Lets start calling a turkey a turkey here. EV's as the affordable family car is just not going to happen. When do the taxpayers say enough is enough? I think its time. Lets let Elon use his PERSONAL billions to run this turkey. If he did, we both know he'd shut down in a second.

The "scales of industry" argument is fairly bunk considering their previous source was Panasonic, who knows full well how to make cheap lithium-ion. There's only so much we can do to cheapen them. We're probably very close to the minium manufacture cost. Cutting out the middle-man will save Elon, what, 5% maybe, 10% if everything goes perfectly? He needs a minimum of 60-80% to compete with ICE.

Heck, the "gigafactory" is just a legal shell for panasonic to come in with their engineers and their patents and their processes under Elon's US company. Elon is just putting on his top hat and monocole and playing landlord, he is not engineering these batteries:

http://www.teslamotors.com/en_AU/blog/panasonic-and-tesla-si...

"According to the agreement, Tesla will prepare, provide and manage the land, buildings and utilities. Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval."

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tldr; Lithium-ion just isnt cost competitive (and has major wear issues). ICE is winning for a reason. We need something better to defeat ICE.

edit: downvotes with zero cites, zero cost arguments against my thesis but wishful thinking? Stay classy HN.

> EV's as the affordable family car is just not going to happen

The average price of a used car last year was $15,900. For that you can buy a 2012/2013 Nissan Leaf with low miles and still have a few grand in your pocket.

EVs as the affordable family car has already happened.

Of course the Gigafactory can change the cost of battery manufacturing. The economies of scale apply here, as the Gigafactory will (roughly) double the world's production of LiIon batteries.

You continue to make these baseless claims in this thread, which makes me question the sincereness of your participation in this discussion.

>The economies of scale apply here

You honestly think mega manufacturers like Panasonic don't have the proper scale for lithium-ion? I'm not denying Elon can cut costs by uber-specializing and cutting out middle-men, but we're looking at maybe 5% or even 10% or so, not 70-80%. Which is what you need to be comparable to ICE cars.

Heck, panasonic is literally making the batteries INSIDE HIS FACTORY. So don't expect big cuts:

"According to the agreement, Tesla will prepare, provide and manage the land, buildings and utilities. Panasonic will manufacture and supply cylindrical lithium-ion cells and invest in the associated equipment, machinery, and other manufacturing tools based on their mutual approval."

http://www.teslamotors.com/en_AU/blog/panasonic-and-tesla-si...

"You honestly think mega manufacturers like Panasonic don't have the proper scale for lithium-ion?"

What is the proper scale? The scale of this factory is the same size as all the other lithium battery plants in the world combined. And do you think Panasonic would be throwing money at it if it thought the numbers were that wrong? This is constantly being presented by some people as a sort of majestic con being perpetrated by Elon, which is just ridiculous when you consider the other players involved.

Its not a con, he knows he can save $trivial_amount domestically. He can probably hit 5% and have ownership of this thing, which is great, but he's not hitting ICE price levels. He's still hitting luxury car price levels. Tesla is a luxury car maker, why is that so hard for people to understand? He competes against Mercedes, Jaguar, etc and wants to sell better to buyers in that class, hence the gigafactory.

He cannot compete with Honda, Chevy, etc. ICE makes far too much sense.

Did you really make a big cite-free post, and then complain that people are posting disagreements without cites?

>has pushed other car manufacturers to follow suit,

This is Tesla's biggest accomplishment, in my opinion. And we will all benefit greatly from it.

'I don't want to be paying X subsidies' is very tired rhetoric which can be applied to every industry under the sun, and you are describing a class of people who you have almost no knowledge of as ignorant.

Furthermore, the profitability criticisms you level are clearly not valid for a growth company. If Tesla wanted to they could be profitable tomorrow, but they're investing in the company so they aren't.

Your numerous comments on this thread all overlook (as far as I see) the fact that Tesla is not the only EV on the market. There are others that are much cheaper, including plug-in hybrids, electric/gasoline hybrids" like the Volt and BMW i3, and fully electric vehicles like the Nissan Leaf.

I think that all these other examples make clear that, if nothing else, the Tesla's high price tag is not exclusively (or even primarily) driven by the cost of its battery. The Tesla, after all, is also a very high end luxury vehicle. Equivalent ICE vehicles are not drastically cheaper. The growth of this category also suggests that the market may not be "choosing against [EVs]" in the way that you claim.

Cost is standardized on range. There's no cheap 250 mile EV. Using Tesla as a comparison against ICE is 100% fair. They all use the same lithium-ion tech and li-ion prices are consistent and nothing is going to make them drop down 70% to be competitive with ICE.

The only thing "consistent" about LiIon prices is their relentless decrease. If you think battery technology is going to hit some plateau in the short run I think you need to seriously re-evaluate that assumption. The path we are taking is exactly the technological progress that you would expect to see and in fact is happening much faster than anyone expected 10 years ago.

The article was obviously part satire and baiting this kind of response but I'd encourage you to walk into a Tesla showroom and look at the marvelous simplicity of the vehicle construction and components. It certainly will revolutionize how cars are made and there's no question reliability and economics will eventually trounce ICE, and again a lot sooner than anyone would have expected.

Tesla has capitalized on the zeitgeist with this, and say what you want about Elon, but that's all irrelevant. Say what you want about the environmental externalities, but ultimately when it comes to mainstream adoption they are irrelevant as well. The economic argument is that cars will be safer, faster, more reliable, and cheaper to operate, in the long run, without an ICE in them.

Ultimately it's a good thing that this will play out over 50 years, since there's a hell of a lot of infrastructure that needs to be built and even more which will become obsolete.

> Why are the working poor and middle class families being taxes to make luxury $100,000 cars cheaper for the top 10%?

2 points here - 1) there are electric cars that aren't 100k Teslas and 2) the 'working poor' don't typically wind up paying federal income tax in the US (as long as they file a return properly - which sucks but..) In fact with the EITC low income families may actually see a negative income tax...

It's not sustainable ATM, no, but it's using a similar strategy as all the hip startups on HN use - get users first, money comes later. In Tesla's case, their initial investment is just several orders of magnitude larger than hip startup X.

And it will pay off. They're building hard to become the world's largest battery producer. And once their affordable model comes out, they will quickly grab a nontrivial share of the nearly one trillion car market.

So on the one side you're paying for the rich person's tax break. On the other you're paying for a greener future, independent of fuels - and you'll be driving an electric car yourself in 5-10 years, and hopefully think back with a smirk about how you made do with the old cars, like you probably do now with brick phones or a world without internet.

> get users first, money comes later.

Its been 12 years and lithium-ion prices are fairly stable, there's nothing that can lower them to ICE competitive levels. If this was any other company you guys would be screaming the usual libertarian take of "OMG MY TAXES" instead of this mindless fanboy worship Elon seems to evoke.

I am impressed by Tesla, but by their marketing. They make smart people sound very, very stupid by advocating for a $100,000 car as the Model T of our time.

I have somewhat mixed feelings on the subsidies. On the one hand, I'm all for encouraging innovation in renewable power, energy conservation techniques, and electric vehicles. On the other hand, it's true that most of the "green" tax credits available to consumers--whether for electric cars, solar panels, or energy-efficient windows--do go to relatively high-income individuals. And it's not unreasonable to be discomfited by that fact.

That said, as others have mentioned, there are lots of subsidies for lots of things and the premise of these ones seems laudable for the most part however they're delivered.