Posted on 05/29/2013 4:23:59 PM PDT by KingofZion
In 2009, as the financial crisis raged and General Motors and Chrysler plunged toward bankruptcy, Tesla Motors faced a seemingly impossible task: raising half a billion dollars to build an electric-car factory. Tesla had just staggered through a year of layoffs, canceled orders, and record losses. Then suddenly, salvation. The U.S. Department of Energy offered to lend the company $465 million at rock-bottom interest rates.
*** And in sharp contrast to Solyndra, the solar panel maker that defaulted on its $528 million loan from the Energy Departtment, Tesla last week paid the government back early, with interest.
Yet despite all the public celebration, both Solyndra and Tesla stand as warnings of the dangers in deputizing bureaucrats to play bankers and venture capitalists. In both loans, the government walked away laughably undercompensated for the risk it accepted in the startup companies. In fact, the Tesla deal was arguably far more costly for America than the Solyndra fiasco.
When the government’s negotiators started hammering out the details of the Tesla investment in mid-2009, it was obvious to both sides that the feds were in a position to name their terms. *** Personal loans made in 2008 by Elon Musk, Tesla’s co-founder and CEO, provide a telling contrast. Musk received a much higher interest rate (10 percent) from Tesla and, more importantly, the option to convert his $38 million of debt into shares of Tesla stock. That’s exactly what he ended up doing, and the resulting shares are now worth a whopping $1.4 billion—a 3,500 percent return on his investment. By contrast, the Department of Energy earned only $12 million in interest on its $465 million loan—a 2.6 percent return.
(Excerpt) Read more at slate.com ...
I think we’re supposed to be more ticked off that some guy who made a pile of money, than at the fact the taxpayers merely got what was contracted? No wonder this article is from Slate, it’s pure socialist envy politics at work. You might want to rethink what you said about this being a rip-off of the taxpayers.
My buddy’s daughter has one.
She gets “free” juice at work.
But another guy bought a Volt and now they’re squabbling over the plug.
The list, Ping
Let me know if you would like to be on or off the ping list
Socialism, fascism, marxism.. its all the same thing..
They are just words.. to confuse the morons..
Mob Rule is mob rule even its called Democracy..
Democracy has always been Mob Rule by mobsters. ALWAYS..
Mob Rule is Tribal Rule.. with Chiefs and everything..
The maggot Obama is the main Chief..
The thing I hate most about the bastards is that they stole and marred Tesla’s name
GOOGLE employees???
Nice. Worth repeating on every thread.
This article ignores the fact that Tesla is actually a house of cards. It is carefully spinning itself as the profitable electric car company. It isn’t.
When it crashes it will do so spectacularly. I predict it will do so in 2014 when the boobs who are financing it can’t hold their breaths any longer. Hell, they just got snookered into writing a check to the feds to pay back the loan.
Ah, liberals.
Sort of like Chevy Volts ... minimize your loss per car by forced sales in volume to the Federal Government.
My brother in law had the 100K model with the big battery. And you have echo'd what he says about it. He's got a loaded 64 vette and he says the tesla blows the doors off it. He's done the electrical/gas comparison and figures dollar for dollar, it gets the equivalent to 100 MPG.
...and the ex-Solyndra plant is being transformed into a major $180 Million R&D facility for Seagate so we can store more info, access it faster, all for a fraction of what we pay today. After all, we certainly need better hard drives to store all this valuable content we create here on FR.
“...and the ex-Solyndra plant is being transformed into a major $180 Million R&D facility for Seagate...”
I noticed that too! The one building has had so many tenants, the signs should be painted so that the names can be washed off easily.
Unbelieveable how many Freepers do not seem to get what happened here. This is crony capitalism at its worst. Elon donates heavy to Democrats, gets huge low interest loan from taxpayers. Elon makes $1.5B, taxpayers get squat. Basically a wealth transfer from US treasury to an individual. Entrepreneurs are the people who run google and apple, who create products without government loans subsidized by the rest of us. If Tesla was such a fantastic idea, it should easily have found backing from all those VC firms in nearby silicon valley. But Tesla realized it was far better off getting a subsidized loan from US treasury.
So what did taxpayers get for the risk? A few green jobs and a few overpriced cars driven by wealthy liberals. At least with GM bailout we saved billions in unemployment comp and associated costs. Tesla was just a wealth transfer from US taxpayer (who took risk) to Elon.
Basically a wealth transfer from US treasury to an individual.
Only if you believe all money belongs to the government and not the people.
No you got it wrong. I don’t envy Elon at all. He negotiated the best deal he could get and worked hard to make his company a success. But I would not deify him for taking taxpayer subsidized loan (the rest of us would be laughed out of the bank) to build this generation’s DeLorean. You don’t seem to understand that resources are limited. That $500 million that went to Elon could have been $500 million in my pocket, your pocket and every other US taxpayer. And I guarantee you we would have spent it more productively than the USG did and created more jobs by doing so in an economically efficient way. If DOE had instead offered to make the loan like a VC firm, then indeed we would have nothing to complain about. But we would also have nothing to talk about as Elon would never have accepted those terms. The government (and the taxpayers who funded the loan) got ripped off, because we gave away money at less than market rates for a project of very dubious value. Personally I’d rather see the money spent on infrastructure - at least we get something that benefits everyone, like the new freeway tunnel that was bored a few miles from my home.
I don’t approve of the Feds making these loans, but Tesla paid them back, good for them!
We’ll have to agree to disagree.
No, major pharma mfgr.
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