
Only the Rich Can Afford It. Should Taxpayers Back It? - peter123
http://www.nytimes.com/2008/11/30/business/30digi.html
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dcurtis
What? This is on the New York Times?

Tesla does not make faberge eggs or something. It makes all-electric vehicles.
They are expensive now because the technology is new. But it is the future.
The price will come down. This is not a subsidy for ultra wealthy people--
it's an investment in a whole new industry. If Detroit gets its 25 billion,
the least the taxpayer can do is help a small company develop technology that
might turn into a major competitor against the Big 3. Then we might not have
to bail them out again.

How does this sensationalist stuff get into the mainstream news media so much
lately?

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Prrometheus
This kind of thinking, "If they got an $X billion bailout, then why can't I
get only $Y billion?", is an example of the kinds of perverse incentives that
these bailouts create. Rarely is the true nature of democracy on such clear
display: everybody trying to rip off everybody else.

~~~
wmf
Didn't Mark Twain say that most people want less government corruption or more
opportunity to participate in it?

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DenisM
Unlike the big 3, Tesla can actually grow into a valuable asset for this
country. Advanced, non-commoditized technology, oil independence, clean air...

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ckinnan
And if you feel that way, you should invest in Tesla. Don't ask taxpayers to
subsidize private equity...this is cronyism, it is not capitalism.

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DenisM
You should pay more attention to the post you are replying to - I didn't ask
anyone to subsidize anything. I have pointed out that there is more merit to
investing into Tesla compared to B3. This is not nearly in the same area as
endorsing or condemning subsidy - it's entirely possible for example to oppose
subsidy and still hold opinion that Tesla is a better subsidy target than the
B3.

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sethg
IIUC, Tesla was applying for loans under a specific program meant to promote
the development of next-generation cars; this is a program that the Big Three
have also requested funding from. The public benefits most from such a program
when _all_ auto makers with scientifically sound proposals can qualify for it,
not just the ones making cars that fit middle-class budgets.

~~~
lutorm
Indeed. Most technologies are introduced from the high end and down, because
the high end is less cost sensitive. This gives time to get experience with
the technology and develop it to make it cheaper, at which point it goes into
mainstream products.

I don't think you should underestimate the power of image in the car industry
either. If you want the all-electric car to become mainstream the public needs
to see that this stuff works and is cool. There's no better way to do that
than to build a car that kicks everyone else's butt.

Reminds me of graphics cards. Nvidia and ATI introduce these ridiculously
overpriced high-end cards that cost $600-700, and a short while later that
tech is in mainstream $150 cards.

~~~
jimbokun
Keep in mind, though, Tesla does not directly benefit from Moore's law the way
Nvidia and ATI do. According to the article, the increase in battery capacity
is more like 8% per year.

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TobiasCassell
Mr Stross appears to be on a mission not to have his content reflect anything
other then the tone of that sensationalism title of the article. I
investigated his bio, he has written a lot of books, mostly technology
related. And he is no stranger to Silicon Valley, which makes me wonder if he
is playing out some personal vendetta against the people behind Tesla.

How about the American government making sweetheart deals with the oil
industry so that the diesel fuel available in the United States isn't
compatible with any of the many fuel efficient automobiles in use all over the
world. What would that title be? "Only the Poor/Middle Class & Rich Can Afford
It. Should the Collusion Between the Oil Industry & the Government Back It?"
Or how about the American government turning a blind eye (or even worse) as
the oil giants snapped up many of the patents for battery technology over the
last decade so nobody can innovate with them? Is it possible Tesla's initial
round of funding would have gotten them a bit of traction if they would have
had access to some of this battery technology? This technology that already
exists but is being squandered thanks to big oil? What would Mr Stross have
used as a title for that one? "Only Everyone Will Be Able To Afford It. But It
Is Not In The Best Interest Of The Oil Conglomerates, Should Anybody In Power
Bother With It?"

Grow some balls Randall.... what happened to the NYT?

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kqr2
The article says that Tesla wants to use some of the federal funds to
eventually develop a less expensive 5 seat sedan. I think with this type of
new technology it probably makes sense to initially target those with more
disposable incomes.

~~~
vaksel
their less expensive 5 seat sedan is still a 60K car, hardly fits yours
average budget

~~~
tomjen
In Denmark that would be an upper middle class car.

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neelk
In Denmark the car tax would turn a $60,000 car into a $168,000 one, right?

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marvin
What he's saying is that Americans whine a lot about how expensive things are.

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mixmax
Why should taxpayers back Detroit?

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Zev
Last time I checked, Tesla wasn't based in Detroit.

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mixmax
I meant why should taxpayers bail out the big companies in Detroit.

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ibsulon
The big three fuel an entire ecosystem of companies who would fall like
dominos, and if those fall then we suddenly have a good portion of 1.1 million
workers on the market for jobs when employment is scarce. Further, those
people have mortgages, and seeing 400,000 (wild-ass guess) fail within 2 years
as these individuals can't find jobs, much less jobs paying what they were
making before.

That affects consumer confidence, and other industries struggle further.

It's possible to argue that the entire US economy needs restructuring and a
depression is the necessary medicine, but you're looking at a lot of heartache
when it happens, on the order of post-WWI Germany.

~~~
mixmax
I see your point, but I disagree.

Keeping the big three alive would make sense if it was the first time it had
happened, and it was a matter of time and liquidity before they would be back
on track. Unfortunately it seems that they are unable to compete in the global
arena, and that this is a structural issue, not a liquidity issue. The only
thing that will come from a bailout is a few more years. The money would be
better spent reeducating all those people that are soon going to be out of a
job anyway.

Regarding your last comment: I just read a comment thread on Reddit about
credit cards that I frankly found disturbing. It seems like it is the norm in
America to use credit cards for major purchases, in between job money, end of
the month money etc. etc. and it doesn' seem that anyone finds this
problematic. I think you will be forced to structurally realign your economy
in the next few years - spending money you don't have isn't a viable long term
strategy, and that's basically what the average American has done for the past
many years. All the bailouts in the world won't change the fact that the basic
problem is that America is consuming more than it produces. It'll only add to
the debt.

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lutorm
So the premise of the article is that the author has decided that Tesla is
using technologies that won't work, and hence it would be a bad use of public
incentives. What makes him think he knows any more about whether it will work
than the people who have thought enough about it to put hundreds of millions
into it?

This is exactly what technology development incentives should be used for,
having money to work on stuff that is not obviously profitable in the short
term, but would be big breakthroughs over the long term if it worked. If it's
profitable right now, you don't need incentives...

~~~
newsycaccount
Then shouldn't the government just invest in fundamental battery tech, not
car-implementation that will never go anywhere without improvements in that
tech?

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twopoint718
Sometimes the best way to get a working technology is as a spin-off from a
practical implementation.

I'm thinking about how building a superconducting particle accelerator led to
great advances in the production of superconducting titanium-niobium. It was
because these components were going to be _used_ , that the effective
technology emerged.

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mattmaroon
This is why I've felt all along that they should have gone for the sedan
first. They'd be getting twice the hype if this were the cost of a typical
Lexus, and people would give them a pass on a $50k price tag because it's new
technology.

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jimbokun
"Can you conceive any way that federal dollars could be put at greater risk —
and for no equity in return, keep in mind — to benefit fewer people?"

Yes. Give it to the "Big 3" auto makers.

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timcederman
To be honest, I'm surprised that the Tesla is seen as a car that only "the
rich" can afford. I'm used to Australia, where a 100k car is somewhat standard
for a middle-class family, but our cars cost a fortune.

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flashgordon
what? 100k is a car for the middle-class family? I like to think I am middle-
class and my mortage is just few (around 4) times that. And I live in Sydney.
There is no way I (or my family rather) can afford that. You seriously cant
think that is not for the rich.

But that aside, that is the price of innovation. Before being mainstreamed,
all technology is expensive and trickles down from the top echelons to the
bottom. This doesnt mean that this car will always be only for the rich.

Secondly even if this was only for the rich, wouldnt a cleaner environmental
footprint (by the supposed rich users of this car) make it a valid investment
(private equity or not)?

~~~
timcederman
"Upper middle class" then. The thing is that I know many families with a
leased 100k car who aren't "rich"...

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ars
I'd say: if we give you a loan, you agree to make all designs public domain.
Perhaps with a small waiting period - say 5 years.

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Hoff
Tesla manages to have PR coverage far out of proportion to the norm.

They remind me of Second Life, at least in some regards.

