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Tesla on ABC World News Oct 25th, 2011...

Tesla on ABC World News Oct 25th, 2011...

I just caught a story on ABC World News tonight about government grants to green tec companies, and they brought up Tesla and Karman Fisker. The interviewer questioned Tesla VP Diarmuid O'Connell, with regard to their SEC filings stating that they "expect continuing losses for at least the forseeable future", and if they don't make a profit, they might not be able to pay back those government grants, to which Diarmuid responds, "...well, we will make a profit".

Personally, I would have put FAR more money into Tesla, over GM, because GM is a JOKE! Their business model is bound to fail again, because they are thinking backwards, and not forwards.... Big unions, poorly built cars, weak designs, no future vision. I have only seen a couple of their new hybrid EV cars on the road, and they are not much to look at. Otherwise, their big commercial push is the new 300, with a former hip-hop artist plugging how Detroit is now cool, etc. Seriously? Who do they think they are kidding? Detroit is a cesspool, and no one I know thinks of 'cool' when the word Detroit is mentioned, but rather $100.00 delipadated homes, in drug infested neighborhoods.

The FACT is, Tesla is new, fresh, innovative, and built in America with the kind of brilliance that made Apple Computers the BIGGEST company on the planet!
I know it's a risk starting a car company in America, because the big three automakers here don't want anyone else to make the look worse than they already do, but seriously, they should be embracing Tesla, because once the Model S hits the market, they all know dam well, they will be doing everything they can to jump on the bandwagon with something that looks just like it.

mscottring | October 25, 2011

FYI - That was Chrysler, not GM.

Larry Chanin | October 25, 2011

Fisker's Federal Fiasco: Loans, 20-MPG Electric Cars, Shoddy Reporting

In this politically charged climate it is "news" to second guess the initiatives to encourage clean energy industries. Of course its not news to question the wisdom of continuing tax incentives to oil companies making obscene profits.

Larry

TikiMan | October 25, 2011

Sorry, Chrysler... GM, all their cars look the same to me. Cheap junk circa 1975.

mscottring | October 25, 2011

Larry - You bring up a very good point. Oddly, the so called "liberal media" is reporting the heck out of these so called 'green' loans. And, by the by, they are in fact loans. But are they spending much time reporting the BILLIONS of dollars the oil industry gets? Nope. In fact there are a lot of things the government invests in, or makes loans to, but the liberal media seems to be heavily focused on the 'green' loans. Odd.

Denis Vincent | October 25, 2011

Larry ...... "making obscene profits" and causing catastrophic environmental disasters and pollution.

TikiMan | October 25, 2011

Mscottring, I agree! I think there is a lot of pressure on any green loans at this point due to the bankruptcy of that solar company that Pres Obama visited his first year in office. Plus all the speculation that Tesla is just another DeLorian (sp?)

Volker.Berlin | October 25, 2011

TikiMan, the spelling is DeLorean, but I think you may in fact be referring to Solyndra in this context? BTW, DeLorean is discussing an electric model... Now that's history overtaking itself! ;-)
http://www.greencarreports.com/news/1067470_all-electric-delorean-dmc-12...

EdG | October 26, 2011

Re: Media reporting

It's not that the media is liberal or conservative. You're just surprised that liberal media is reporting "against" green topics. Media in the USA comes from advertisements, more money from advertisements comes from splashier "news". If there's no news (e.g., gas companies getting the same old same old is not news) they have to exaggerate something till it sounds like news. Got an hour to fill, you know, ads to push.

While there's always some truth to these things, you can't get too excited at our news. You never know whether the real story is interesting or not.

I say this from personal experience. My local media tried to make a negative story about me once. Had I explained the truth, and how there was nothing to the story, they would have had no choice but to pick and choose my words to make the story better!

So if you want good advertising, just make sure the media can make a positive story about you. They're very creative people, and listeners trust them.

TikiMan | October 26, 2011

Volker,

Thanks for correcting me on the spelling. However, I am in fact referring to DeLorean.
Mr DeLorean left GM back in the mid-late 1970's to build his own car company using major government grants. His vision was to build a futuristic sports-car, that even a middle-class executive could afford (at the time there weren't any cool mid-priced sport cars). He was almost constantly reported about in the media, and there were many skeptics if his car and company would be successful.
Needless to say, he was set up to fail, and then literally set-up by the FBI to destroy his credibility, family, and life as he knew it. I am sure GM had a BIG hand in this, as they couldn't have someone messing with the big three.

I suspect Tesla is going to be up against some very similar attacks, and I would not be surprised if GM is currently paying huge amounts of money to various groups to try and destroy Tesla.

Volker.Berlin | October 26, 2011

TikiMan, thank you for the additional details. I did not know the full story but it makes me curious. I should go an read some more about the DeLorean case, when time permits.

jfeister | October 26, 2011

I don't think the government should be subsidizing businesses in any way shape or form. We have a government to protect our safety and empower prosperity, not conduct social engineering and venture capitalism.

Tesla, GM, and every company, needs to stand on it's own two feet. If Tesla is truly that great, they will attract sufficient private investment. If private investors aren't interested enough to fund a company, why should the taxpayer have to?

Mycroft | October 26, 2011

jfeister, you'll never get a new tech automotive manufacturing plant without the gov't loan guarantees. It's just far too much capital required for too great a risk. So we would be stuck with the same old stodgy GM, Ford, and Chrysler dinosaurs.

Normally I would agree with you. But I would MUCH rather the gov't do some economic stimulation by investing loans in new technology than in buying up bonds with cash like the Fed did.

In fact, I wish more had been spent on fixing our infrastructure rather than buying up US bonds. At least then we'd have some solid bridges, highways, and electrical grids to show for it.

Yes, Solyndra went belly up and Fisker turned out to be an embarrassment, but you can't win on every investment. You have to play the odds.

EdG | October 26, 2011

IIRC, Tesla said they would be doing mostly the same stuff without the loans. Taking the loans was a no-brainer, and the loans shortened the schedule for delivery.

Timo | October 26, 2011

@jfeister, ATVM loan is not subsidies or bailout money. It is good business for government which just accelerates tech development and creates jobs and stuff in US, instead of making people buy things outside. As it is good business to government it is good business to taxpayers too.

Started at Bush administration, continued at Obama administration.

https://lpo.energy.gov/?page_id=43

Note that GM did get bailout money. It's completely different thing than ATVM loan. Also oil business gets a lot of subsidies, way more than any "green" tech.

Mycroft | October 26, 2011

To be fair, jfeister is against the loans to GM et al as well, and probably for the oil companies also. If only he were king. :)

Mycroft | October 26, 2011

That said, all this news mongering about Solyndra and Fisker really ticks me off. They don't mention the literal billions that GM and Ford got and the definitely don't mention all the many billions in subsidies and protection, (not loans), for the oil business.

I bet if they increased the price of gas at the pump to actually cover the true cost of delivering it, it would be $10/gal or more! And that's not even counting the environmental externalities that can't really be calculated.

Timo | October 26, 2011

I have nothing against government doing smart business. That's capitalism in its purest form, even government is doing profit, but because that all comes back to taxpayers in one form or another it's like taxpayers would be making money with programs like that.

I wonder how much gallon of gas would cost in US without subsidies...

David M. | October 26, 2011

@Timo - That's right. The Government has been doing this for 100+ years. Loans and gifts. Every tax deduction you can claim is a gift. It's tax revenue the Govt forgoes. Don't have to pay it back. Loans are loans. Are the naysayers ready to give up all the loans and gifts, or just the ones that don't benefit then? How about the low interest student loan their kids will need for college?

TikiMan | October 26, 2011

Volker,

Here is a video link to the whole story about John DeLorean and his car company... http://video.google.com/videoplay?docid=8295574887775056318#

ckessel | October 26, 2011

Complaining about government subsidizing businesses via loans is ridiculous. The government helps subsidize all businesses by paving the roads so people can reach the business, installing traffic controls so they can reach it safely, providing infrastructure for public water and sewage so the business can have a bathroom, paying for primary education so the populace is educated enough to work at the businesses, providing electrical infrastructure to power the businesses, public sidewalks so people can get to your business, public lighting so the customers aren't mugged in the dark, and the list goes on, and on.

Businesses get a huge helping of subsidies in all sorts of less than visible forms. Complaining because the government is handing out that last few dollars for actual capital investment is disingenuous at best.

Unless you're going to go full anarchist and advocate having no government paid roads, lighting, no schooling, no sewers, no sidewalks, absolutely no government funds that could remotely contribute to any businesses success?

Brant | October 26, 2011

@ckessel
Well put!
(warning: message sent via government subsidized infrastructure)

TikiMan | October 26, 2011

ckessel,
I don't think jfeister is referring to government monies for socialized government services (i.e. roads, traffic lights, police, fire-rescue, etc public services), but rather government subsidies and loans given to privileged private sector corporations (most of which have powerful DC lobbyist that can sway our democratic system in their favor).

In the case of Tesla, I think it is a good thing our government is loaning monies to such a forward thinking company which will not only promote new American jobs, but also decrease pollution, and our ever-growing need for more foreign oil (much of which comes from terrorist sympathizing nations, and or greedy US oil monopolies), thus decreasing our need to constantly be involved militarily in these regions of the world.

However, on the flip side, I don't believe in our government should be handing out subsidies and loans to greedy backward thinking corporations and monopolies that don’t play by the rules of a true ‘free-market’ democracy, just because they have an inept and out-of-date business model (such as GM).

The same goes with corporate ‘farm subsidies’, which do nothing to help small struggling farmers, but rather just drives them to sell their farms to greedy corporations, whom take the monies to squander on their personal elite luxury lifestyles, and promote under-wage illegal jobs for poor immigrants, thus further driving the small legitimate farmers out of business for good!

Mycroft | October 26, 2011

Stop holding back TikiMan, tell us how you really feel. :-D

TikiMan | October 26, 2011
Andrew18 | October 26, 2011

Is it possible to lose our deposit money if Tesla goes bankrupt? My wife is concerned as am I.

mscottring | October 26, 2011

Andrew - I am by no means an expert on the issue of bankruptcy litigation. But I believe the answer is yes, you could lose your deposit if this, or any company you made a deposit with, goes bankrupt.

BYT | October 26, 2011

It's an investment in not only your spot in line for the Model S but your confidence in the company. Every startup company is in the red to start out and makes money with time, Tesla Motors is the first American Car company to go public in how many years??? I have seen enough to be confidant in my $5k investment as well as an investment in the companies stocks as well.

TikiMan | October 26, 2011

Andrew18, Don't be frightened off by these 'status quo' bought and paid for morons! Mitt Rummy would tell you that eating vegetables is bad for you right about now, if Pres Obama supports it.

The reality of it is; Tesla has been working diligently for many years leading up to this car. The roadster was merely ‘proof in the pudding’ that they COULD do it when no one else could (and they DID!) There is no denying it, starting a car company is about like starting up a big oil company. However, Elon Musk is NO John DeLorean or Preston Tucker, anymore than the ‘Tesla Model S’ is a DMC-12 or Tucker 48.

Besides, I am sure GM, Ford, and Christler all have BIG FAT checks going out to him as I write this.

Sometimes revolution requires risk, and I for ONE am willing to be part of the electric car revolution!

ckessel | October 26, 2011

Andrew, yes, you can lose the deposit. I asked before depositing mine and was told it's part of Tesla's operating capital and in the event of bankruptcy we'd be there along with all other debtors. I figured odds were slim I'd lose it, so I put in my deposit anyway.

David70 | October 26, 2011

And the money I've lost in my stock account in the past 6 months is way more than my $5k deposit. I've got about $10k in TSLA, and even that combination is less than my other stock has gone down. Fortunately it (the stock market) has been going up for the past few weeks. Hopefully it'll continue to do so for a few more months. Nobody knows for sure.

Andrew18 | October 26, 2011

Well I feel with 40 k on the line we should at least have some input in the interior design of the car and more info on pricing and options.

I did not feel reassured by the Tesla vp on that interview

I dont want to be on the wrong side of some bad decisions I have no control over

Larry Chanin | October 26, 2011

"Is it possible to lose our deposit money if Tesla goes bankrupt? My wife is concerned as am I."

Hi Andrew,

I think it is possible, but unlikely to lose our deposits.

I ran across this financial analysis today. Hopefully it will provide you and you wife some relief.

Although these folks are not exacting advising to buy Tesla stock, they don't think it will run into any financial problems in the near term.

http://www.thestreet.com/r/ratings/reports/analysis/TSLA.html

"TESLA MOTORS INC is extremely liquid. Currently, the Quick Ratio is 2.55 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has increased from the same period last year.

At the same time, stockholders' equity ("net worth") has greatly increased by 3,587.32% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future."

Larry

Brant | October 26, 2011

I saw an interview with Musk where he stated that to loose your deposit a few things would have to happen:
1) Tesla goes bankrupt
2) Elon in mentally incapacitated (but not dead)
3) The person replacing his decision making capacity acts against his written will.

Salesmanship? Dunno, but I think that's what he said

jbunn | October 26, 2011

Andrew,

You have input, but for 40k do not get to steer the boat. Nor do I as a reservation holder. We are limited to staying on the boat, or getting off.

Been watching Tesla for a few years, and they have been tracking to plan. NUMMI was well in order. Our Seattle brick and mortar store has been there for a couple years.

Eh, I could be wrong, but i'm relaxed.

brianman | October 26, 2011

@TikiMan

Thanks for the DeLorean video link. Somewhat depressing but worth watching.

@Andrew18

I asked that very same question prior to reserving. I got a swift response that I was comfortable with. YMMV, but my recommendation is to formally ask a Tesla representative privately regarding your concerns.

@TikiMan

Feel free to knock Romney (or any other politician for that matter), but in this case there's a difference between private venture capitalism and publicly funded venture capitalist. As such, hypocrisy isn't the right characterization. IMO, at least.

Robert.Boston | October 27, 2011

Tesla is on track (apparently) to start delivery of cars to customers by July 2012, four months before the election. Made in America, sold in America; not only won't anyone be pulling the DOE loan, but it will be a great moment of political theater. I'm willing to bet that President Obama will be in Fremont when the keys to Signature #1 are handed over to the first owner, or at some similar "putting America back to work" photo-opp.

EdG | October 27, 2011

I'd find it very surprising if the President actually showed up there. What would all the workers in Detroit be thinking? "Those should have been our jobs!"

I think the White House will make at least a passing mention of it, probably a lot more than that, but I don't think they'll make it "personal".

Volker.Berlin | October 27, 2011

Latest twist (getting back to the original topic): Fisker is fighting back, not surprisingly.
http://green.autoblog.com/2011/10/26/fisker-fighting-back-against-abc-ne...

ckessel | October 27, 2011

For my deposit (I put the $40k for the Sig), I figured it was incredibly unlikely that Tesla would suffer catastrophic failure before I took delivery. Now, maybe bad things will happen and I'll be left with a car that has no company behind it anymore, but that's a risk no matter when I buy it. Heck, that's a risk with other manufacturers (was it Kia or Saturn that folded?).

stephen.kamichik | October 27, 2011

I believe it was Saturn that folded.

TikiMan | October 27, 2011

Personally, I am banking that Tesla will merge with Toyota-Lexus, before all that amazing tec goes to waste.

On the flip side, I am FAR more worried about all the folks still driving 12 MPG gas cars and trucks (millions of which are still in production), and the fact that gas will very well likely hit $6.00 to $7.00 a gal by the time the Model S hits the road. There might be a LOT of bankruptcies on the horizon, with gasoline becoming worth more than the price of Gold! With $200.00 a fill up, I can see many products and services taking a huge hit. Even Google and Apple could lose half of it's share price, when many customers find out that they can no longer afford luxuries like fancy smart-phones, or tablet-computers, because transportation and food cost skyrocket 50%!

Right now, what few of these big public companies aren't saying in their SEC filings, is if oil keeps skyrocketing, their stocks will plummet faster than real estate!

Nicu | October 27, 2011

Tech companies will be fine, don't worry. When gas is super-expensive, the first thing you cut is going out & travel. So what do you do? TV, games, web, video, digital social activities etc.

brianman | October 27, 2011

... until the next set of rolling blackouts, followed by a baby boom, ...

petero | October 27, 2011

@ jfeister “I don't think the government should be subsidizing businesses in any way shape or form.”

I ‘slightly’ disagree.

One example - the early 1960’s. In the early 60’s President Kennedy set in motion a plan to put a man on the moon by 1969. NASA succeeded and spent more than a few billion dollars in the process. However, the real benefit of the moon project was not landing on the moon; we invented and developed a wide range of new technologies, products, materials, etc. that greatly advanced the world. It would not have happened without Uncle $am.

Starting a new car company requires billion$. The fact that Tesla can do it for so little speaks volumes.

I agree our government should not have bailed out the banks, etc. Our government should have been investing in alternative fuels ever since the 1973 Oil Embargo. U.S. drivers pay half of what other industrial countries’ drivers pay for gasoline (it doesn’t cost them more to make it). All our government has to do is raise the gasoline taxes and encourage hydrogen, natural gas, fuel cells, or the Lord forbid –EVs.

By the way, if the government had not built all those paved roads back in the early-mid-late 1900’s we would all be riding horses or driving Jeep Wranglers. When the motor press starts driving the "S" all those who are worried about losing their deposits will refocus and worry about WHEN they will get their "S."

sarge7359 | October 27, 2011

@brianman's comment: "... until the next set of rolling blackouts, followed by a baby boom, ..."

I lol'd at the apparent Pavlovian response to the lights going out.

Brian H | October 27, 2011

Both GM and Chrysler went bankrupt, and received huge bailouts, making the gov't the de facto owner. Most GM shares were turned over to the union, and the bondholders etc. got hosed (illegally).
http://www.thefreemanonline.org/featured/political-bankruptcies-how-chry...

Brian H | October 27, 2011

Ford, btw, did not go bust, and refused bailout money. It has subsequently taken loan guarantees for EV projects, etc., but no grants, and the ownership structure is unchanged.

Andrew18 | October 27, 2011

I suppose I am reassured by these comments, just a wave of cold feet. Im getting over it though. I'm going to stay put.

Keep that sig under 85k!

Mycroft | October 27, 2011

"Keep that sig under 85k!"

It's possible. After federal tax rebate.

viao44 | October 31, 2011

Ok TikiMan – its one thing to debate gov. loans to large US auto makers but please keep the people of Detroit out of this.

I lived in the Detroit area for most of my life until I moved for work. Still in Michigan. Yes, there is a ‘big commercial push for the 300’ but that’s all it is, commercials, most new cars have an associated advertising campaign. ‘Former hip-hop star’? Try current, he isn’t dead, his name is ‘Eminem’ and last I checked he was still producing music. Also, the artist isn’t plugging how ‘cool’ Detroit is… HE IS FROM DETROIT!

Detroit is ‘cool’ we have great sports teams and arenas, casinos, art, lots of History, water front, parks, and museums. Many of them built and donated by people associated with the automakers. Not to mention Detroit is less than an hour away from one of the great lakes and less than 4 hours away from all great lakes.

Sure, there are bad neighborhoods but your city would have them too if there were more houses than jobs… No city can sustain 10% decreases in jobs for 10 years and still be squeaky clean and drug free.

Lastly, please do not refer to Detroit as a cesspool. Those of us who know what Detroit is and what its people are about… take offense to that. Yes, Detroit is a depressed city. Without the government loans and bail outs… Detroit would be even worse off. Like it or not… if we didn’t help the Detroit auto makers the whole state of Michigan and the surrounding region would collapse. I don’t think you fully understand how many people depend on the auto industry in and outside Detroit. Just think of how many auto assembly plants and parts suppliers don’t even operate in Michigan.

Thanks for kicking Detroit while its down. We thank you, a$$hole.

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