The big three automakers are clamoring for a piece of the hypothetical $25 billion auto-bailout fund. And newcomer Tesla wants a piece of that too, apparently. The startup auto-maker has requested $400 million in low or no-interest loans to fund two upcoming projects (likely their new $70k electric sedan and a low priced third car).
Tesla has raised nearly $200 million in capital since 2004, including a recent $40 million convertible debt financing. Prior to the debt round, Tesla unsuccessfully tried to raise $100 million in new capital.
But forget the private capital markets. You can’t beat cheap loans from the government. Of course, the entire bailout is far from certain at this point, so don’t count those chickens yet.
Personally, I’d rather see any money that is being used to “bailout” companies go to those at least attempting to innovate and produce projects that are appealing to consumers. Tesla needs to do some serious work on the price point of those cars though…
OMG Sorry to have to say this.. Elon Musk and his FAT EGO do not deserve any funds. He is the one that took the company down the path of destruction. He is just worried now cause his soon to be ex wife is going to rape his accounts for half he owns. SORRY TESLA….. too bad so sad.
Go call Jason Calacanis, Tesla’s biggest fanboy. Maybe he can use some of that Mahalo money to help them out. Oh wait, Mahalo laid off 10% of their employees. Nevermind…
Tesla will fold in 2009. Good luck to those who purchased this car.
I seriously doubt it, they’re to well connected to money.
They want taxpayers to help fund the development of luxury sports cars? Wow. I’m sure there will be a lot of people in the market for a $70,000 car after they lose their job because the bailout fund was squandered on companies like Tesla.
Perhaps someone should forward the Bailout Analogy Guide to the folks at Tesla:
http://www.melt...y-satstyle.html
There’s a better chance of a long-term + return on the Tesla investment, as opposed to maintaining the illusuions of the Detroit 3.
Are any of the ‘foreign-owned’ car builders thta have factories in the US eleigible for this handout ?
“There’s a better chance of a long-term + return on the Tesla investment, as opposed to maintaining the illusuions of the Detroit 3.”
How so… please explain.
GM HAS released an electric car (which everyone raves was an amazing and “GREAT” product).
GM IS releasing an affordable electric car next year, the VOLT.
GM HAS been investing in hydrogen fuel cells and hydrogen cars since the 60’s.
GM HAS been developing and working on their hydrogen cars as well as the new skate platform which entirely redesigns the car as we know it.
Again, sorry, why is there a better chance of long-term investment on Tesla?
@observer — Both Tesla and Volt are already failures: sport electric cars at $100,000 and $40,000?
The Tesla is a defective, expensive joke, useful only to drive to the store [very fast] and come back home to plug it in for hours…
The Volt is a defective, expensive joke, useful only to drive to the store [very fast] and come back home to plug it in for hours…
By the time the Volt is released to the market new technologically superior foreign electric cars would cost about $20.000 or less. Please tell me why anyone would buy the Volt, a very expensive lemon?
Actually Tom I’m able to get 200 miles on a charge fairly easily with my Tesla Roadster. My commute is five miles a day, and with another trip or two thrown in a day (i.e. lunch,dinner, meeting, movie, whatever) that means I can charge it every 4-5 days.
I just had my charger put in yesterday and with the low speed charger it takes 6-8 hours for a full charge and with high-speed charger it takes 3-4 hours.
I actually think I’ll never have to buy/drive another car since I only do two or three road trips a year (i.e. San Diego), and when I do I can us my old Mini Cooper.
95% of folks drive less than 100 miles a day… so the Tesla 2.0 at 60k and 3.0 at 30k would do the trick. Additionally, battery life is getting better and better, so my guess is they will be able to get the range from 220+ to 350-400+ in two years. When the car gets to 400 miles a charge and under 50k then it really starts to make sense because the gas savings of 2-3k a year pays for the additional 15k of the car (or something like that).
As a customer of the Tesla for four days I can tell you the car is a dream (as it should be for 120k) and a lot of fun. as much fun as it is, it’s not a toy either…. it’s very practical. It has a trunk, it’s comfortable, and it’s got more range than I’ll every use.
Nothing would be better than our country getting off foreign oil. That’s the number one reason I bought (second would be the environment, third would be it’s a sexy car). we can’t be involved with the backwards, human-rights violators in the middle east who repress the basic rights of women, gays, and journalists/bloggers.
Getting an EV is a political statement for me. We have to kick the oil habit.
all the best, jason
I would love to know how this car has been functioning, Jason. You had it four days. I had mine for a week and the motor completely failed.
It’s a dangerous defect because the car just stops driving. On the freeway, it could be a death trap, because the regenerative braking slows the car down much more quickly than a conventional car.
The car is a lemon. It was very fun to drive for the few days I had it, but clearly, Musk is more about having a car look great than be safe.
Anyone driving one of these is a beta tester. It’s one thing to beta test a new piece of software, but you don’t drive software at freeway speeds.
Also, the car is nowhere as near as energy efficient as claimed. It’s really false advertising. The battery and its charger runs constantly even when the car is off and regardless of whether it has been driven for days.
Customer service is abyssmal. I think I am seeing a company that will implode. It makes sense that Musk, whose Paypal is quite anti-customer and whose SpaceX, whose rockets explode on takeoff, show us where he is going with Tesla.
No regard for the customers, and products that explode. Scary.
I think Martin was referring to the fact that GM has said that it will be out of cash by January. And that even if they received the full $25B, with their current burn rate of $2B per month (GM’s estimates), that they’ll be in exactly the same situation in a little over two years—unless they find some miracle that will pull them out of their current tailspin.
This was the first thing that I thought of in all of the bailout discussions.
Startups are actually hurt when the government bails out large companies.
If they would FAIL then the startups like Tesla can jump in take their place.
If we constantly bail out the losers we’re going to miss out on the innovation from companies like Tesla.
Kevin
Amen to that. Capitalism promotes survival of the fittest. It ensures that the weak (and poorly run) companies fail, enabling stronger ones to take their place.
The bailout is going to bite us in the end (in the future).
I hope they get it. That industry needs some new winners.
The loosers are the winners
losers
Give it to them, at least they are innovating.
Does anyone outside of Silicon Valley and the idiotic “Internet celebrities” such as King Douche Jason Calacanis give two hoots about Tesla?
no
from your comments, your love for innovation is so obvious
I love innovation. But innovation should benefit masses and not just people within the 415 area code.
Well yeah I think they do, a fast, trendy, eco friendly car. People go nuts for the Prius and it’s not even that eco-friendly compared to good diesels or that fast. I think need to sell it in Europe, would sell loads here.
Though they have two problems – they need to spend a lot of R&D, but funding is probably tight and they are basically selling a luxury product in a down market which is hard (though Apple seem ok so far)
I personally am in favor of them getting an equal break as the big fat big 3. They are leading edge innovators with automotive technology. The ‘Luxury’ car is only a prototype…
Also, they have a proven track record. Which helps…
The auto start ups are a better hope to change the game and a better investment. The Detroit mentality, established regulatory and other constraints (i.e. pensions, unions/uptime requirements, the build-to-stock/push/dealer-based approach), prohibitive size of the Big 3 which prevents them from doing much of anything revolutionary… or evolutionary for that matter, and their poor, overly conservative, arrogant, and insecure middle to upper management have created this mess and now might cost America billions of dollars. Time to stop rewarding a dying horse. I’m not saying shoot it in the head, but I am saying the way to re-create American automotive leadership must include the start-ups (and in a large role) and other out-of-the-box-thinking and managed companies.
The “start ups” do not have a chance in the automotive arena. As I commented above, the Tesla [at $100,000] and Volt [at $40,000] are failures and very expensive lemons.
Elon Musk, one of PayPal founders, is a ‘visionary’ and as such, out of touch with reality. His company has been failing from the start.
The Volt is another creation of the failed Detroit mentality, managed by the idiots asking for billions of our money on Capitol Hill.
Sure why not. But only on the condition that I get my Tesla for FREE.
Anyone one else want cheap loans? Maybe the entire population of the US. This is getting insane. People smell money and it turns into feeding frenzy.
Tesla is innovative, but not buyout worthy? How many cars have they actually delivered?
Oh btw.
Check out http://www.jobstaxi.com
New Jobs. Razorfish. Art.com. Edge of Reality.
@Yasser Someone said that the Tesla company was hoping for Mercedes Benz [Daimler] to buy their “technology” –Which is incredibly stupid…
Tesla has been bleeding money for months and would not be surprised at all if it shuts down in the next few weeks…
Their “technology” is a lame, lame obsolete idea.
I say let the oil companies give the big 3 their bailout with the subsidy they’ve (big oil) received by the release of gas guzzling cars in the first place.
Let the government bail us out!
I’ll settle for just $500K of that $25 Billion
It’s a bargain!
-C
The big oil companies are “public” companies, meaning that millions of Americans are their shareholders.
What you are proposing makes no sense: either way, money from a federal government bail out or from American citizens [shareholders] is exactly the same, IT IS all money from us, taxpayers…
I’ll take a billion too, while you’re at it.
Its appalling the way people are abandoning the free market. Is our plan to bail out everything?
I say if you can’t stand on their merits of your product perhaps you shouldn’t be in business. If your idea is so great, raise the capital on the merits.
Debt and handouts are the causes of our current problems, not their solutions.
You know, someone must ultimately pay for this stupidity. These guys and the politicians evading the real causes and solutions to this mess are more than happy to dump it forward to your kids.
Instead of piecemeal bailing out everything that is politically connected and screwing everything, we need to stabilize the currency. The dollar is the real cause of both the inflation that created the housing mess and the deflation we are now experiencing.
There is no escaping the fact that we have left free market principles. Only returning to them will set this ship right. Once the deflation is ended, credit should come back.
I don’t think they really need the money as desperately like the Big 3 does. They can still run their company and keep selling Roadsters on the current funds, though they definitely will need more if they want to progress on their second and third models.
Getting a low interest loan like this means they don’t have to borrow in the private markets with much worst terms given this kind of financial climate. It also means they can continue development of Model S earlier rather than waiting for the environmental permitting for their new factory which is holding up the DOE loan guarantee they got earlier.
Personally I think they will be able to do more with the money than the Big 3. The big 3 will burn through $400 million in no time with not much done; heck they burned though billions just last quarter. Tesla will be able to come up with their Model S electric sedan and develop their third $30k model. I think most people who are critics of Tesla just feel their cars are too expensive, but Tesla is aiming to go to more affordable cars.
“critics of Tesla just feel their cars are too expensive, but Tesla is aiming to go to more affordable cars”
It is not only the absurd price, it is a ridiculous technology. Tesla cars are plagued with technical problems such as transmission defects, plus their actual use is very limited at about 40 miles –after driving it you have to recharge it for several hours… Right now, hybrids are by far the best choice.
Where do you get the 40 mile number for Tesla? I know that’s the advertised range of the Volt. The advertised range of the Tesla is 200-250 miles per charge. I’m sure in reality it’s less than that, but I’d be surprised that it’s only 40 miles.
How did you arrive at 40 miles? The Prius and Volt can already do 40 miles on battery alone and they are bigger, heavier cars. According to Calacanis, his car can do 180 miles out of 220. The equivalent of 40 miles worth of charge is reserved to prevent complete drain. Out of the 1000s reserved over 600 have been rolled out the factory. So far the only technical problem is the transmission. And any adopter of new technology knows there is always problems. And charging takes 3 hours on a 220 volt circuit, any house made equipped with a washer/dryer/refrigerator will be wired for this already. I’m pretty sure the buyers of a roadster can afford to have an electrician spend 4 hours to drop a new line in the garage. Hybrids are good technology, right now, but even Toyota knows the long-term goal is zero emission vehicles.
@Bubba & @Joe — I agree that the technology used for both Tesla and Volt cars is awesome. However, at this time, their market is fairly small, for buyers who are millionaires and do not mind buying a new toy.
For the average American family it is far from a good deal, in any way you look at it. Maybe you guys are wealthy and do not really care, but I am afraid that you do not have a practical perspective.
Just think for a moment about your statement of “The Prius and Volt can already do 40 miles on battery alone” –the Tesla and Volt power source is similar: batteries, which means “about 40 miles an hour.”
“So far the only technical problem is the transmission” Yes, and also battery malfunction/failure [the Tesla has over 6,000 tiny batteries] –The other “problem” as mentioned, is ridiculously short driving range… and again, after that, you have to plug it in. If only for 3 hours.
Also, I would not trust Calacanis even if he says “good morning”
Sorry “about 40 miles an hour.” should have been “about 40 miles driving range”
To Bubba and Joe. Please READ my comment before offering yours.
In your rush to post a comment, you both are actually proven my points.
Thank you.
If a bunch of investors want to throw money out the door, that’s their business.
But no way in hell should Tesla get any fed money! now that’s getting into my pocket.
“the entire bailout is far from certain at this point, so don’t count those chickens yet.”
There are two different ‘bailouts’ or low cost loans here. One has already been set up by Congress and the other is new.
Tesla applied for $400 million out of the $25 billion in loans already approved by Congress a few months ago. (http://hybridre...llion-loan.html) Congress approved a bill setting aside $25 billion for the building or re-tooling of factories to create vehicles that have higher fuel efficiencies. It’s being run by the DOE (http://apps1.ee...m/news_id=12080). Note that suppliers are also eligible to apply for the loans. The system to create the loans has already been set up and the car companies (like Tesla) have already applied.
The clamoring for a new ‘bailout’ is actually a new and separate item.
The key words here are “fuel efficiency.” The DOE would provide funds, starting at $10M only for companies affiliated to large automakers and *only* for hybrid vehicles. Tesla does not manufacture hybrid vehicles.
At the federal level, it seems that there is no interest in providing loans/grants for the manufacture of electric vehicles.
BTW, we already have the technology to produce electric cars [sedans and SUVs] with a 300+ miles range, to be recharged *once a week* or *once a month.* The technology has been offered to federal agencies and automakers… But, you know what happened? Nothing. No response. Go figure… It it all hot air and lip service.
The key words here are “fuel efficiency.” The DOE would provide funds, starting at $10M only for companies affiliated to large automakers and *only* for hybrid vehicles. Tesla does not manufacture hybrid vehicles.
At the federal level, it seems that there is no interest in providing loans/grants for the manufacture of electric vehicles.
BTW, we already have the technology to produce electric cars [sedans and SUVs] with a 300+ miles range, to be recharged *once a week* or *once a month.* The technology has been offered to federal agencies and automakers… But, you know what happened? Nothing. No response. Zilch. Go figure… It is all hot air and lip service.
I think private companies need to be able to figure out how to be profitable and exist without government intervention regardless of their size or innovation.
tesla is a niche carmaker and will not affect the american economy if it fails. If the big three automakers go bust you will see massive unemployment. Not to mention our production capacity if we go to war will be at risk. the big three automakers have a lot of negative externalities tied to it while telsa does not.
Are you people actually comparing the Tesla to the Big 3? If GM runs out of cash, which they are on pace to do, you will see a domino effect which will lead to an even further, more impactful, decline in the economy.
If Tesla runs out of cash, a few F-list Internet celebrities won’t have new toys to play with. Boo-hoo.
Well said. You forgot “a few F-list Hollywood celebrities”
The Tesla company is failing already. They are hoping for a “mini” bailout and, sadly, they might get it from the liberals in Congress. But it will be too little, too late.
Many of TC readers are annoyed by these “negative” comments, but they are in denial…
Tesla asking for Fed bailout money is ludricous. What a joke.
I say give Tesla and other “new” car companies $1 billion each. We have thrown a trillion at these finance fools and Detroit is going to burn thru whatever cash the government gives them. Give Tesla $1 billion and maybe they can realize economies of scale and bring the tech to the masses.
CREATE A FAMILY CEDAN/ASK 4 GOVERNMENT INTEREST/FUNDING/WAVE OF FUTURE TRANSPORTATION……………THE TIME IS TOO SEEK THE INTEREST OFF THIS COUNTRY/4 NEW DEVELOPMENT AND FUTURE TECH…….NOT A BAILOUT…….!
Why are you guys being so ignorant about this issue. We need a new American car company. with new socially responsible management, Tesla’s technology is the best in the world. I’d rather give a billion to Tesla, let them take over a GM plant in Detroit, and start building $20k electric cars, with tax breaks for those who buy them. We could actually save the economy and the planet instead of letting them waste away while we argue over who’s richer or more stupid.
Do we really need a new american car company?
A lot of information on how to build an electric car, including cost cutting measures and design tips, can be found on Frank Didik’s website at: http://www.didi...om/didik_ev.htm. In particular, check out the section entitled “How to Build an Electric Car”, “Didik Turtle or How to build a two person electric vehicle in 14 hours” and “Critical and accurate assessment of electric vehicles”. He is the first to truly mention the pro’s and con’s of electric cars and an excellent history directory of electric cars, starting in the 1800’s. Many years ago, Didik was the found of the Electric Car Society.
Send your comments to your Senators and Representatives in Washington. Innovators like Tesla are doing more for advancing change in the automotive industry than the old “Detroit” dinosaurs. The American public should never have had to bail out the auto industry and the refusal of auto execs to retool and bring non-oil and gas dependent vehicles to the market place is reprehensible. I say bail out Tesla so it can continue its efforts. And if we must bail out the auto industry, make them devote two-thirds of their production to fully electric consumer cars. They can license the technology from Tesla if need be. So, whether you agree with me or not, write Washington DC and let them know what you want!