Think the $25 billion is to help save the Big Three automakers and preserve manufacturing facilities essential to national security? Think again.(Snip)In fact, Tesla Motors, a struggling San Jose start-up manufacturer of electric cars in Feinstein's back yard, has already applied for $400 million in EISA loans to build a new plant for making a luxury $60,000, battery-powered family sedan.
So while some members of Congress tut-tut Detroit executives for wasting money on private jets, Washington is entertaining taxpayer-financed loans for an automaker that caters to Silicon Valley millionaires... [snip]
But a letter from U.S. Sen. Diane Feinstein, D-Calif., on Thanksgiving Eve makes clear what few taxpayers know: The billions in auto loans are a giant honey pot intended for any auto manufacturer in the nation. [snip]
Is its federal loan application seed money -- or bailout money? Auto analyst James N. Hall sees a grim future for the company: "If the market wants (electric cars) in the number Tesla is talking about," he told Business Week, "a larger auto company will bury them on cost."
[I.e., it's just another component of the Great Green Scam being perpetrated against us from every direction. Serious/big auto makers will make them in mass when the public wants them, and not before: all money prior to that change is waisted.]
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Tuesday, December 9, 2008
California wants to raid Big 3 bailout cash for green cars
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3 comments:
This article is dangerously inaccurate and ignores the fact that this "honey pot" was never set up as a "bailout" -- and the federal government *intended* for small companies and startups to tap into the program.
Far from a bailout, the loan program began a year ago -- long before the market collapse and GM's looming insolvency -- as the Advanced Technology Vehicles Manufacturing Program, which proides new and established automakers and suppliers with low-interest loans and other incentives so they may build fuel-efficient vehicles and get them to customers faster. In fact, 10 percent of the program's funds were always supposed to go to companies with fewer than 500 workers -- the kind of lean, innovative companies the government knew would be leading development of next-generation powertrains.
After Congress earmarked $25 billion for the program in September, the economy cratered. November vehicle sales were the lowest in 26 years. Detroit automakers scrambled to find a solution to quickly depleting cash reserves.
The Detroit Three asked for some of the $700 billion Troubled Assets Relief Program for the finance industry. When the White House refused, automakers focused on the Advanced Technology Vehicles Manufacturing Loan Program, trying to refashion it as a bailout.
Although some on Capitol Hill (and the author of this blog) may not want to acknowledge the distinction, make no mistake: Abandoning a progressive program for next-generation car technology into a general bailout would be a sad irony: The Detroit Three have resisted building hybrids and electric vehicles for decades, and now that consumers have turned away from their gas-guzzling fleets, they need a bailout and want it from the program that would finance fuel-efficient vehicles.
The Detroit Three say they need cash to avoid firing millions of workers. But mortgaging the future to cover up the auto industry's mistakes would have dire consequences for the next generation. Last month, President-elect Barack Obama outlined an economic recovery plan that could put 2.5 million Americans to work, many of them in "green collar" jobs building wind turbines, installing solar panels and developing fuel-efficient cars.
Now let's get to Tesla. The Silicon Valley startup is applying for $400 million in federal loans. These are not handouts. Rather, the funds would support two projects: The first would supply recyclable batteries and components for other automakers hoping to produce more fuel-efficient vehicles. The second would help finance a manufacturing facility to make a five-passenger family sedan — precursor to a more affordable subcompact that will begin around $30,000. Tesla's all-electric and zero-emission vehicles free owners of petro-state dictators, OPEC-mandated price fluctuations and Big Oil oligopoly.
Since its creation nearly five years ago, Tesla has directly addressed the crises of energy security and climate change. Tesla is already producing the all-electric, zero-emission Roadster, which delivers double the efficiency of the Toyota Prius and has zero emissions -- it doesn't even have a tailpipe. The sports car is the technical validation and precursor to a planned family sedan and subcompact in Tesla's product pipeline — evidence that EV technology is already viable.
Those who question whether the government should fund a company building a $109,000 sports car don't understand a cardinal rule of the tech industry: Early generations of any breakthrough product are always expensive. Cellular phones in the 1980s cost $2,000. Now they're free. So-called early adopters are willing to pay more for the newest items, amortizing R&D and subsidizing later buyers. And the US government has a long tradition of spurring innovation in many cutting-edge products -- from the computer on which I write to lasers, radar, sonar, airplanes and the navigation systems in cars.
Hardware also becomes more affordable within several product cycles, whether on the time frame of Moore's Law (for semiconductor-based electronics) or, in the case of Tesla's lithium-ion battery capacity, at the fair clip of 8 percent per year. That's how Tesla will move from a six-figure sports car to a $57,500 sedan to a $30,000 subcompact within several years.
Given the tight venture capital lately, a government loan to Tesla would speed delivery of more affordable vehicles that eliminate dependence on foreign oil and reduce drivers' carbon footprint. Tesla is applying for the loans in the truest spirit and intent of the Advanced Technology Vehicles Manufacturing Loan Program. Let's not conflate it with the bailout it's become.
This article has it exactly backwards: the Detroit 3 are trying to raid a progressive loan program for increasing energy efficiency in vehicles for a short-term bailout of business as usual. The D3 have shown a total lack of foresight and innovation for the past 30 years and are now suffering for those mistakes. They want to remedy this by robbing the Advanced Technology Vehicle Manufacturing Incentive Program which congress set up in 2007 to encourage exactly the innovation that they have been neglecting: the development and production of significantly more energy efficient vehicles.
If the Detroit 3 succeed in robbing the ATVM funds to underwrite business as usual for a few more years, the United States will have missed a tremendous opportunity to save billions of dollars in oil imports, strengthen our economy, cut off funding to foreign governments that sponsor terrorism, and greatly reduce both greenhouse gas emissions and air pollution.
It is interesting how we all seem to forget about the real business engine that drives America - small business and entreprenuers! Tesla is an example of big / pure thinking being applied to a real problem. The Big 3 don't make green cars for lots of structural reasons (legacy investments, union obligations, franchisees, etc...). Tesla is a case study in really solving the problem and is, quite honestly, one of the most important things currently going on in an industry that is collapsing under its own weight. Silicon Valley and the dynamic value that unmitigated ingenuity creates is already a proven winner. The tech boom of the last 20 years has created more wealth for America than all of our legacy industries over the last 100 years.
If you study what is wrong with the current OEMs you will find that they can learn *everything* from Tesla. As a taxpayer that is going to evaluate the Bailout in terms of ROI I would certainly rather place that bet on Elon and his backers VS the Big 3. Value creation VS survival is always a better bet.
Scott Painter
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