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?

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.

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

Who are you, Walter Lippman?

You need to be clear what kind of financial aid you're talking about. Is it research grants, or bailouts?

The (semi) convincing reason for these massive bailouts is to avert immediate crises that will affect huge numbers of people. This crisis atmosphere is the only reason such huge amounts of money can be rammed through with minimal deliberation.

OTOH $400M is a lot of money for some kind of R&D grant. Tesla is a private company. $4M would be a different story. If we're throwing out $100's of M here and there in pure grants, then there are also many other deserving recipients. Who decides who should get those funds? I wouldn't put Tesla at the top of that list.

Tax payers shouldn't be subsidizing for-profit businesses.

It only works when the tax payers get voting shares in the for-profit businesses. This is the China model, except it is the government that owns the companies. And they've owned shares in the companies before the companies go bankrupt.

What would happen if US tax payers actually had voting shares of companies, starting with GM? Obviously there would be a very low turn out rate, but taxpowers could vote if they were sufficiently marketed to.

Tesla makes electric cars targeted at the wealth. There are plenty of other electric car companies making cars that are way less than $100k.

Which companies?

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

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.

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.

If taxpayers are going to fund anything, it should be energy storage (e.g., battery) research. Not how to engineer the inadequate devices we currently have into expensive, impractical prototypes.

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.

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.

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.

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?

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.

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

In Denmark that would be an upper middle class car.

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

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

Why should taxpayers back Detroit?

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

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.

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.

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...

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

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.

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.

"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.

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.

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)?

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

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.

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

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