
  The Government Comes Through For Tesla With A $465 Million Loan - jasonlbaptiste
http://www.techcrunch.com/2009/06/23/the-government-comes-through-for-tesla-with-a-465-million-loan-for-its-electric-sedan/
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kirse
_When the mess gets sorted out, I'd like to have a conversation with whoever's
in charge at the time the car czar or whoever and say 'I'd like to run your
plants, if you don't mind,' Musk said (<http://tinyurl.com/km5e4h> )_

Sounds like Elon will fit right in at Detroit. Run an unprofitable car company
and dip into our pockets when you can't do it right.

~~~
tptacek
(a) Musk says they're on track to be profitable in months. Do you have
evidence to muster that he's lying? I'm sure he could be, but it's not very
interesting just to say he is.

(b) Detroit auto companies have historically been very profitable.

(c) The auto industry is structurally inhospitable to newcomers. Legacy
manufacturers have locked up supply chains, locked up distribution channels,
and are entrenched in a regulatory environment designed for 12-figure
industrial bohemoths. That there may not be a way to "do it right" is an
argument in favor of propping up Tesla.

~~~
radu_floricica
I like Tesla like the next guy, but when it comes to investing, especially
public money, the burden to prove profitability comes on the company.

I'm glad this happened, but the GP is not wrong to criticize this. It's still
taking public funds and putting them in a company who still hasn't made a
profit.

~~~
kirse
You summed it up very well.

"Profitable in a few months" means you're unprofitable. We can draw up all
sorts of extrapolations based on preorders and expected order rates etc., but
until the _past_ month's income statement shows green, a business is not
profitable. It really is that simple.

I hope nothing but success for Tesla in that they usher in an electric car
revolution (just imagine if the USA became the primary source of electric cars
for the world), but until then I'd like to see some numbers if I'm paying for
Elon to run his mouth.

~~~
davidw
I'd rather own stock in a company (early Google for instance), that is a few
months out from 'profitable', with a sales curve that is trending up, up, up,
than stock in, say, GM, in the last month or two that it was profitable.

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ccc3
It will be interesting, a few years down the line, to compare what Tesla does
with its $465m compared to what GM does with its billions. Obviously not an
apples-to-apples comparison, but it might illustrate the cost of the inherent
friction in massively bureaucratic companies.

Regarding Tesla's profitability, it's EBITDA profitability, and in the words
of Warren Buffet:

"References to ebitda make us shudder-does management think the tooth fairy
pays for capital expenditures?"

Certainly this is an important milestone for Tesla. It means that they're
getting a handle on their supply chain, but this doesn't make them anything
close to a stable company. They still have to get to a point where their cars
aren't just profitable, but profitable enough to pay for the factories they're
built in. Hopefully this latest influx of cash will be enough to get them
there.

~~~
vaksel
GM will use it's billions to come out with the Volt with production in
hundreds of thousands. A car for the public that has the best of both worlds,
Electric for short range trips, with gas as backup for when you run out of
charge.

Tesla will use it's millions to come out with the Model S, with production of
1-2000 units a year. A car for the more luxurious segment, that's electric
only, that'll leave you stranded if you forget to recharge the battery.

~~~
pchristensen
Re GM: That's quite optimistic. Most of the money and effort with GM will go
into making it a stable employer for as many as possible.

Re Tesla: Quite possibly true, but you shouldn't build infrastructure from
scratch to build millions of cars. They should validate their business and
market at 2000 units/yr and expand if it works.

Comparing the two, the GM money is to prevent downside, the Tesla is to
capture upside. Both are valid reasons for investment and only hindsight will
tell if either was a good bet.

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skipwalker
Just a quick question. Why is Tesla more deserving of a loan to accelerate
their development of electric cars than a company like Aptera
(<http://www.aptera.com>)?

This is the fundamental problem. The government is not funding direct research
in a University setting, they are directly funding one company over another in
a nascent industry. Why do Tesla's shareholders get this advantage over other
startup company shareholders?

This is one of the problems this conservative has with this situation.

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zandorg
Along with the huge NASA cash ($billions) for SpaceX, it's a good year for
Musk.

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weegee
at least we know that money is going to a company that is actually building
cars that will run when the oil runs out.

~~~
weegee
no fans of electric cars here, I see.

~~~
jrockway
No, it's just a bunch of people whining about "their money" being used to
foster innovation. It's OK when someone invests money in their web app for
displaying porn with rounded corners and "type centric design", but it's a
waste when the government tries to encourage the development of sustainable
transportation technology.

Gotta love the conservatives...

~~~
sgrove
I'm more or less fanatically liberal. But I happily set that aside while
visiting HN.

Please don't bring in such broad attacks. I almost voted it down as well
(despite agreeing with the sentiment), for the exact reasons pointed out by
radu_floricica.

Let's maintain a high level of discussion for HN.

