Tesla Nabs $465M Government Loan To Build Model S

SignalFreq writes "Tesla Motors, based in San Carlos, California, was approved yesterday for $465M in loans from the Department of Energy's Advanced Technology Vehicles Manufacturing program. Tesla plans to use $365M of the money to finance a manufacturing facility for the Model S (review, Letterman video) and $100M for a powertrain manufacturing plant in the SF Bay Area. 'Tesla will use the ATVM loan precisely the way that Congress intended — as the capital needed to build sustainable transport,' said Tesla CEO and Product Architect Elon Musk. Tesla expects the Model S to ship in late 2011 and the base cost to be $57,400 ($49,900 after a federal tax credit). Ford received $5.9B and Nissan received $1.6B under the same program."

Re:A requirement for the loan

[Darkness404]

Um, as far as I know, Ford hasn't taken any of the bailout money, nor is Ford bankrupt, unlike Chrysler and GM.

Re:Green Car on a Budget - Innovation Not Required

[WaywardGeek]

Tesla is the only company in the world selling production electric cars that are fully street-legal. They started with a $100K car, and now they're doing a $50K car. They have a $30K car planned for after that.

Basically, you need economies of scale to get the cost of these cars down. Tesla's riding that curve, and plans to eventually have cheaper cars than Ford. This is a potentially great place to invest in American innovation, not to mention the environmental benefits or jobs.

Tesla Fanboi

[2obvious4u]

I've been watching Tesla since day one. The make cars the way they should be made. You place an order for your car, then the car is built. It was privately financed until this infusion of funds. For what the model S is and does the price isn't to high. I looked at buying a Mitsubishi Lancer Evo and it clocked in at $42,000, while I was shopping I noticed that entry level BMW's and Audi's were also at the $40,000 mark. So I saved $22,000 and bought a 2009 Corolla. My next car will be a Tesla as soon as they start selling them on the east coast. The Model S is as nice a car as an Audi or BMW, without the need to change the oil or pay at the pump. It makes the Chevy volt look like a joke and puts all the hybrids to shame, it is the ultimate commuter car.

Re:Wasted taxpayer dollars

[Rei]

Wrong in so many ways.

1) It's not a grant. It's a loan.
2) The Model S is right in the price range of high-end luxury sedans (which is what they're making).
3) Tesla got the overwhelming majority of their Roadsters when there was no EV tax credit. Sure, it'll increase their Model S sales volume, but they'd still sell a ton without it.
4) The whole world is lacking in venture capital right now. It's called a financial crisis. About the only entity that investors trust to loan money to these days are major world governments. Hence, that makes them effectively the only entity able to give loans worth half a billion dollars to all but the most established large businesses.
5) If you have such a problem with half a billion dollar loan, I'd hate to see how you'd react to the $5.9 billion loan Ford just got from the same program.

Re:Green Car on a Budget - Innovation Not Required

[Anonymous Coward]

Though it's not exactly inexpensive, the cost of ownership of these things is very low. They have 10% of the moving parts of a standard ICE vehicle. No transmission. Batteries will last 7-10 years. No oil changes, no belts, no nothing. Only thing you need is electricity (which with most utilities you can get a time of use nighttime rate which is extremely cheap), and tires every few tens of thousands of miles. Over its lifetime, the Model S will compare favorably to a car costing more like $35k (not cheap, but getting there), particularly if you charge on cheap nighttime rates.

A point about nighttime rates. Most utilities actually have this, but are not allowed to offer it publicly to customers (regulators don't want customers to feel pressured into signing up for these rate classes which help the utility balance load more easily). However, if you call your utility and ask, you'll find many have a residential rate class which will give you peak rates during the day (maybe 10-15 cents/kWh) and night time rates after 9pm (2-4 cents/kWh). This is huge if you have an EV. The most basic charging set up these days has a built in timer so you can set them automatically to charge only during certain times, on a preset schedule, so you get home, plug in as soon as you get there, and the system handles the rest.
 

It's a Loan.

[0100010001010011]

It's not a handout. It's a loan. You know like the loans you can get for small businesses from the feds and state governments.

Re:A requirement for the loan

[Rei]

Exactly. Tesla's approach is perfectly cogent. Starting a car company is a *huge* expense. Look at what Coda is having to go through to bring a new car to the US -- they mentioned that they still need to crash another *30 to 40 cars* to get certified. And that's just the half of it. There are no volume parts producers for EV components. Look at the Roadster transmission fiasco -- there literally was no multi-gear transmission in the world that would work with their motor, and when they spent a fortune trying to get a company to engineer one for them, what they ended up with couldn't take the stress.

The logical approach, then, is to piggyback as much work as you can onto that of an existing manufacturer (in this case, Lotus), focus only on what's different, and start at the high end so that you can absorb the capital costs into the vehicle price without creating sticker shock. People expect a carbon fiber car that does 0-60 in 4 seconds to be expensive. The fact that low-volume EV drivetrain components are super-expensive doesn't matter there, because so are the low-volume ICE components that they compete against.

This is the next logical step: an independently developed, not-piggybacked, luxury sedan. This means building a large-volume factory, with a chassis developed from scratch that's designed for your EV needs. Of course, this is incredibly expensive. Hence the need to raise a ton of capital. In the middle of a financial crisis. :P

Once they've retired that risk, even higher volumes/lower prices become realistic. Which is their plan with the Bluestar.

That seems to be the same approach being taken by Fisker. I think a reasonable alternative approach is that being taken by Aptera. Three wheels to skirt the federal requirements, but put a heavy *independent* focus on safety, with a vehicle that's so uber-streamlined and lightweight that it simply doesn't need a powerful drivetrain or large battery pack to perform well. Hence they can start at near the bottom of the market, where there is a lot less competition. Once they're rolling off the lines, you can expect to see from them what Tesla is doing now -- raising large amounts of money to build a factory for a more mainstream, higher volume sedan (although they'll almost certainly keep their extreme-efficiency focus).

Re:More bullshit

[Anonymous Coward]

"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and *general Welfare* of the United States" U.S. Const. Article I, Section 8, Clause 1.

Libertarians, most. annoying. fanboys. ever.

Re:ABOUT freakin' time

[WinPimp2K]

Electric cars will be nice, but putting the plant in California is massively wrong and stinks of rotten pork.

If Tesla is going to succeed in the long run, they need to be in a pro-busioness climate, and not in a state that needs money so badly the punitive tax burden combined with out of control state regulators will force them to either go belly up, or move their facilities to another state later (at great expense and possibly triggering additional fallout from the Feds for not staying in CA).

Re:A requirement for the loan

[ivucica]

Well, at least they're having more luck squeezing money out of people than real Nikola Tesla... [wikipedia.org]

Despite having sold his AC electricity patents, Tesla was destitute and died with significant debts. Later that year the US Supreme Court upheld Tesla's patent number, in effect recognizing him as the inventor of radio.

Immediately after Tesla's death became known, the government's Alien Property Custodian office took possession of his papers and property, despite his US citizenship. His safe at the hotel was also opened.

...

Tesla's family and the Yugoslav embassy struggled with the American authorities to gain these items after his death due to the potential significance of some of his research.

Re:Electric vehicles aren't great

[MojoRilla]

This is pretty stupid. He assumes that the Tesla batteries will last as long as laptop batteries do. Three years. Read up [teslamotors.com] on all that Tesla does to lengthen their battery lifetimes. Tesla says you will still have 70% capacity after 5 years and 50,000 miles.

Re:More bullshit

[k_187]

Set them as a foe, then set foes to -6. I think you can still do this.

Re:A requirement for the loan

[Rei]

What part of "why put a cap on Tesla? $500 million is nothing compared to the $6billion the government flushed down the toilet when they gave it ford, nobody is going to buy a ford anytime soon regardless of the price." made you think that federal emergency loans ("bailout") was being talked about at all?

The federal government gave Ford $6B. The poster pointed that out. A subsequent poster treated them like an idiot for saying that (confusing the bailout with the ATVM loans), when in fact what the parent said was 100% correct. For the subsequent poster: FAIL.

Re:Geography

[hguorbray]

Although I don't doubt that there are political reasons for having some Tesla mfg in the US (not to mention tariffs, etc) there are also some practical ones:

1) You can't just take some laid off Mexican auto assemblers from an old GM plant, put them in a new building and tell them to start making Electric car drivetrains -there are probably entirely new process steps (not to mention components) which would make this a non-starter
2) they probably need to tweak that process as well as being able to introduce changes in parts as the design is tested and improved

therefore it makes sense for the factory to be close to where design/engineering takes place -not to mention that there is also a highly trained, technologically able workforce in the Bay Area.

Also, thanks to Hitech, Lockheed, Lawrence Livermore Labs, etc there are a great many machine tooling shops in the area which are second to none.

Think of this as a pilot mfg plant -they will no doubt try to go somewhere cheaper when it comes time to produce quantities in the 100ks

On the other hand, we have the only large scale auto manufacturing plant left on the West Coast just down the street from me: http://www.nummi.com/ , so stranger things have happened.

-I'm just sayin'

Re:Green Car on a Budget - Innovation Not Required

[WaywardGeek]

BYD F3DM is a hybrid, and only sold in China to the government and corporations.
The Mitsubishi MiEV is still in research phase, and I wouldn't hold your breath waiting for a US version
The Subaru Stella EV is still only a concept car, though it may be sold soon in Japan. Again, good luck getting one here.
AC Propulsion E-Box? Seriously? It's a $55K conversion kit, not a car, and it converts a crummy $15K car into a crummy $70K car.
Subaru Stella is not yet in production, and it'll be a long time before we get to buy them.

So long as we're talking about cool future technologies, I'd include the Volt and Aptera. I hope all these companies make it, but high-volume production is key. Tesla has the lead in this area, and they're further along at developing the technology than any other company.

Re:Green Car on a Budget - Innovation Not Required

[Rei]

BYD F3DM is a hybrid,

No, it's an E-REV. Extended-Range Electric Vehicle. It has 40-60 miles of all-electric range. It just happens to *also* have an onboard generator.

The Mitsubishi MiEV is still in research phase, and I wouldn't hold your breath waiting for a US version

Wrong and wrong. It's both under production and for sale now in Japan, and they've announced US plans for "before 2012".

The Subaru Stella EV is still only a concept car, though it may be sold soon in Japan. Again, good luck getting one here.

Wrong and wrong. Same as MiEV. Don't you keep up on this stuff before you post?

C Propulsion E-Box? Seriously? It's a $55K conversion kit, not a car, and it converts a crummy $15K car into a crummy $70K car.

That doesn't make your statement any less false.

Re:Green Car on a Budget - Innovation Not Required

[harmonise]

Tesla is the only company in the world selling production electric cars that are fully street-legal.

No they aren't. [think.no]

Re:More bullshit

[StopKoolaidPoliticsT]

And what does "promote the general welfare" mean? Well, if we look to the Federalist Papers, we'll see:

Federalist 23 (Hamilton):

Defective as the present Confederation has been proved to be, this principle appears to have been fully recognized by the framers of it; though they have not made proper or adequate provision for its exercise. Congress have an unlimited discretion to make requisitions of men and money; to govern the army and navy; to direct their operations. As their requisitions are made constitutionally binding upon the States, who are in fact under the most solemn obligations to furnish the supplies required of them, the intention evidently was that the United States should command whatever resources were by them judged requisite to the ``common defense and general welfare.'' It was presumed that a sense of their true interests, and a regard to the dictates of good faith, would be found sufficient pledges for the punctual performance of the duty of the members to the federal head.

Federalist 41 (Madison):

A system of government, meant for duration, ought to contemplate these revolutions, and be able to accommodate itself to them. Some, who have not denied the necessity of the power of taxation, have grounded a very fierce attack against the Constitution, on the language in which it is defined. It has been urged and echoed, that the power ``to lay and collect taxes, duties, imposts, and excises, to pay the debts, and provide for the common defense and general welfare of the United States,'' amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defense or general welfare. No stronger proof could be given of the distress under which these writers labor for objections, than their stooping to such a misconstruction. Had no other enumeration or definition of the powers of the Congress been found in the Constitution, than the general expressions just cited, the authors of the objection might have had some color for it; though it would have been difficult to find a reason for so awkward a form of describing an authority to legislate in all possible cases. A power to destroy the freedom of the press, the trial by jury, or even to regulate the course of descents, or the forms of conveyances, must be very singularly expressed by the terms ``to raise money for the general welfare. ''But what color can the objection have, when a specification of the objects alluded to by these general terms immediately follows, and is not even separated by a longer pause than a semicolon? If the different parts of the same instrument ought to be so expounded, as to give meaning to every part which will bear it, shall one part of the same sentence be excluded altogether from a share in the meaning; and shall the more doubtful and indefinite terms be retained in their full extent, and the clear and precise expressions be denied any signification whatsoever? For what purpose could the enumeration of particular powers be inserted, if these and all others were meant to be included in the preceding general power? Nothing is more natural nor common than first to use a general phrase, and then to explain and qualify it by a recital of particulars. But the idea of an enumeration of particulars which neither explain nor qualify the general meaning, and can have no other effect than to confound and mislead, is an absurdity, which, as we are reduced to the dilemma of charging either on the authors of the objection or on the authors of the Constitution, we must take the liberty of supposing, had not its origin with the latter. The objection here is the more extraordinary, as it appears that the language used by the convention is a copy from the articles of Confederation. The objects of the Union among the States, as described in article third, are ``their common defense, security of their liberties, and mutual and general welfare. '' The terms of article eighth are still more identical: ``All charges of war and all other expenses that shall be i