Posted on 06/24/2009 5:43:03 AM PDT by SeekAndFind
Once again, the federal government is handing billions of dollars to auto companies. The last round of loans raised the question of whether General Motors and Chrysler could shake off their creaky ways and survive to pay the money back. The question this time: Can Tesla Motors become enough like one of those old car companies?
The latest round of handouts is coming from U.S. Energy Dept. funds to boost development of greener vehicles. The department issued $8 billion in loans on June 23, granting Ford Motor (F) $6 billion, Nissan Motor (NSANY) $1.6 billion, and tiny electric-car startup Tesla $465 million. While it's fair to say that Ford and Nissan have staying power, Tesla is a riskier bet.
The Silicon Valley company faces a massive challenge to generate the kind of cash needed to develop new cars that will sell in sufficient volume to make real money eventually. While Tesla is racing to lower costs and hone the development of its first-generation Roadster—along with a fleet of less expensive, more mainstream cars—it's tough for any company to make a significant profit on low-volume cars.
"The business model is wrong," says James N. Hall, principal of 2953 Analytics, a Detroit-area auto consultancy. "The prices of their cars are too low for the kind of technology they want to sell. You have to sell a lot of them. As production goes up, they will realize how undercapitalized they are."
Tesla plans to use $365 million of its loans to develop the Model S, a five-passenger, $50,000 sedan that is scheduled to go on sale in late 2011. The rest of the money will be used to build an electric-battery plant to sell Tesla's electric-drive technology to other carmakers.
(Excerpt) Read more at businessweek.com ...
“...spunky” ?
Tesla took millions in deposits for cars not delivered and spent the money for operating capital.
Now they get 445 million of Obama bucks to waste.
Obama needs him credit card taken.
I read the “spunky” quote in the article. For some reason, I don’t think of “spunky” when I think of making autos...
Tesla spinmeister Daryl Siry left the Silicon Valley startup because CEO Elon Musk was pushing to accept deposits on the Model S sedan.
The Model S exists only as a prototype. Tesla has no factory or financing with which to build it. When Musk announced that the DOE would approve Tesla’s loan application and decided to accept $40K Model S deposits Siry smelled fraud and bailed.
Valleywag calls Musk “The New Preston Tucker,” revealing that Musk told a recent Tesla “town hall” meeting that Tesla deposits were not guaranteed. This despite earlier assurances that Musk would personally guarantee deposits. With reports of Tesla asking for up to $75K in unescrowed “reservation payments,”.
We here in Louisiana are all of a sudden in the Big Fat Middle of another Government Auto scam. I’ve written extensively about it on my blog.
http://lincolnparishnewsonline.wordpress.com/
Can’t Governor Jindal do something about this use (or misuse) of Louisiana taxpayer money?
Jindal is driving the deal. He was the ringleader at last week’s announcement presser. I was there.
The energy HAS to come from somewhere.
Even if by some miracle they manage to decrease the price of electric vehicles and improve performance, rising electric costs and shortages will push consumers toward preferring internal combustion despite their regulatory efforts to make fossil fuels unaffordable.
Would this then make electric vehicles feasible?
It would be a significant step in the right direction.
But you'd still be facing the hurdle of consumer rejection due to poorer performance and inability to instantly recharge batteries. Technology may improve recharge capabilities, but it'll never be as quick or convenient as pulling into a service station to fill up your gas tank.
Really? What's the typical capacity utilization of the power grid overnight?
It will be if you just switch out a standard battery pack.
Tesla was founded by Silicon Valley eggheads on the assumption that building state of the art electric vehicles was really pretty simple, production of such vehicles only being held back by the fact large carmakers were in love with the internal combustion engine.
All Tesla has really manage to produce is a $100,000 electric powered 2 seater sports car that has had transmission problems and been subject to a recall less than a year after deliveries started. It may turn out to be a good car, but the trick isn’t to produce a $100,000 sports car, it’s to produce a $20,000 electric vehicle that has adequate range to be used as a daily driver, and to make a profit selling at the $20K price point. Tesla has not even come close to doing this.
Making cars to help create that demand will help in the long run.If you can get consumers to purchase cars that they really don't want to buy.
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