I love your blog and am a loyal reader. I am also a big fan of Tesla Motors.

I think that your post on the subject may have been factually incorrect and possibly damaging (if even a little) to a great upcoming company.

What little I know about the relevant government programs and how they relate to Tesla Motors comes from their recent blog entry:

Message to Washington: Don’t turn a good government program into a bailout
http://www.teslamotors.com/blog2/?p=66

I was going to highlight some points, but the article is short enough that I wish you would just read it yourself. From what little I know about you from your public face, I would imagine that Tesla Motors is something you would get behind (if you knew the facts) rather than tugging at the rug under their feet during this precarious time. The company is not focused on fancy little sports cars for the super rich. They are applying for loans to build a sedan version and to supply parts to help other automakers develop their own electric vehicles. I would also imagine they would ultimately like to build a much more affordable vehicle for the general public.

Best wishes and have a happy holiday!
Eric
http://phorgyphynance.wordpress.com/

Message to Washington: Don’t turn a good government program into a bailout
by Diarmuid OConnell
Vice President of Business Development

published Thursday, November 27th, 2008

When Congress passed the landmark Energy Independence and Security Act (EISA) in December 2007, the media and Capitol Hill focused heavily on the Corporate Average Fuel Efficiency (CAFE) standard. Congress increased the standard from 27.5 mpg to 35 mpg by 2020, marking the first time the CAFE average had been raised since the 1970s.

Almost entirely lost in the subsequent discussion was the fact that Section 136 of EISA created a $25 billion fund known as the Advanced Technology Vehicle Manufacturing Incentive Program (ATVM). The ATVM specified that the Department of Energy (DOE) should provide loans, loan guarantees and grants to new and existing automakers and suppliers to encourage development and speed delivery of next-generation cars – vehicles that meet higher standards for fuel efficiency and stretch technology beyond the internal combustion engine. The program aimed to provide “grants and loans to eligible automobile makers and component suppliers for projects that re-equip, expand, and establish manufacturing facilities in the U.S. to produce light-duty vehicles and components that make meaningful improvements in fuel economy performance.”

The ATVM program became a reality when funds were appropriated in late September to get the program off of the ground. Tesla Motors immediately began developing an application, proposing two advanced technology vehicle projects to be funded by DOE loans. The first project is an Advanced Battery and Powertrain Manufacturing facility that would supply batteries and components for Tesla cars and, more importantly, for other automakers. The second project would help us to finance a manufacturing facility to make our second vehicle, a five-passenger sedan known as “Model S.” We submitted our application to the DOE Nov. 16 – three days after the program became official.

Meanwhile, the macroeconomic environment deteriorated, and Detroit automakers scrambled to find a solution to quickly replenish their rapidly depleting cash reserves. October sales for nearly all large automakers plunged to near-record levels, prompting executives to consider strategically questionable mergers and even bankruptcy – moves they claimed would cost millions of jobs.

Naturally, their sights turned on Washington, seeking bailout loans from the Treasury Departments via the $700 billion Troubled Asset Relief Program (TARP). But when the White House made it clear that the TARP was off limits to the automakers, some on Capitol Hill initiated an effort to divert the $25 billion ATVM monies into a general bailout of domestic automakers — an option that would not fund next-generation powertrain work but would instead give ailing businesses little more than a short lifeline. The pressure on Congress to pervert the intended purpose of the ATVM program will be intense when the CEOs return to Washington in the first week of December.

It would be an enormous mistake to refashion the ATVM into a bailout. The original spirit and intent of the program is critical for the nation’s economic security – and the importance of the program is even greater given the harrowing economic climate.

Earlier this month, as layoffs were mounting among the Detroit automakers, President-elect Barack Obama broadly 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. California is already showing that America needn’t buy into the specious argument that pits the environment vs. the economy: In October, the University of California, Berkeley, released data showing that the state’s energy-efficiency policies created nearly 1.5 million jobs from 1977 to 2007 and boosted salaries by $44.6 billion.

Since its founding in 2003, Tesla Motors has been directly addressing the pressing crises of energy security and climate change. The company is already producing the Roadster, an innovative precursor to other all-electric, zero-emission models in Tesla’s product pipeline — de facto evidence that electric vehicle technology is here today. Tesla Motors is applying for the DOE loans in the truest spirit and intent of the program, and the company does not endorse the diversion of the ATVM resources for a bailout of any kind.

Tesla Motors is the future.

A Green Power Grid will result in cheaper (long term) energy from the sun and wind reserves for powering our cars instead of shipping dollars (wealth) across the seas for oil and away from domestic services… Its a huge drain on the economy (think of the money multiplier effect this will have on our banks through deposits and lending. If Pickens is right and $600B/year ends up back in domestic banks…) Anybody not working for the big three or an oil company should at least not disagree with this logic.

If the government is going to consider saving defunct and failed entrepreneurs/politicians (Wagoner at GM, and the others at Ford, and Chyrsler) then why not help promote Telsa which has been doing the job that the big three should have been doing all along, which is innovating and applying the newest technology.

It costs a Tesla Roadster owner something like one cent a mile after the initial investment. Sure, the Roadster is an expensive car, but they have limited economies of scale. If they were mass produced, they would not be $109K but something much more reasonable. Not an entry level car price quite yet, but much more affordable iteratively into the future.

Since this is the technology the big three should have been focusing on for the last decade instead of using political clout to protect their market positions, managements jobs and perks, this technology and the Tesla Motors company should be helped and encouraged by the American government for the long term benefit of the American taxpayer.

Lets take an even grander strategic view from management at Tesla Motors. Any attention except their obituary is good for them. NYTimes coverage has people saying the same thing… “Pfff, another jumping on the bail out gravy train…” But it begs people to ask the question what is in the best interest of the American taxpayers… A big three still standing and with government support… or a long term viable solution to an oil problem being supported by the government?

Well played Tesla Motors… well played, indeed.

Disclaimer: I do not work for Tesla Motors or own stock.

http://www.teslamotors.com/design/gallery-body.php

The design is too racy/showy. Much like the BSDs that drive around in their yellow Lamborghinis…. I much prefer a 911. Understated and classic.

There are currently two public “guesstimates” of Black Friday/weekend sales out there that I know of.
1. ShopperTrak: http://www.shoppertrak.com/news_retail_sales_112908.php
2. National Retail Federation: http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=610

The way I see it, there are three main reasons why ShopperTrak’s foot traffic number would not be close to the total sales in $. (1) Does not account for online traffic & sales, (2) does not account for traffic for those stores not in the 50,000 that are watched, and (3) the total $s spent per visit may vary from year to year. You might expect with gas prices on people’s minds even after the recent drop, that they would rather get more of their shopping done in fewer visits.

Again this is the best data that is available to the public at this time and you have to understand you need to tweak the numbers out there to get at a better estimate of true sales.

One question I have had on my mind for a while related to your AmEx comment is: why is Capital One stock performing better than AmEx’s over any time in the past two years to now? Capital One has so much more subprime exposure than AmEx so the only reason I can think of is just total credit card volume for AmEx’s customers is going to decrease drastically.

You may be right…might be more reason to short American Express next year if you and Steve are right, and you seem to be…

Exactly right. Why should Tesla be put at a competitive disadvantage by restricting cheap funding to the big 3? Does the cheap big3 funding carry a requirement that they only sell cars to poor people, as the headline implies? In fact, reading past the headline I note that Tesla says they need the funding to bring a lower cost sedan to market, not to bail out “very very high-net-worth individuals who invested in Tesla motors”.

I wish I was surprised to see the Times take a story about the wisdom of bailouts and turn it into some sort of eat the rich thing.

Maybe you wish no money was allocated to improve the fuel efficiency of cars? You don’t need to drag Tesla’s name in the mud to argue that point…