Musk admits he ran Tesla out of money

[jkp1187]

Originally Posted by ShadeTreeMech

Is the tesla ridiculous expensive? of course

is the range to blame? heck no

Even living in the rural area I live I don't generally drive more than 40 miles before i come home again. that is within the range of most battery powered cars. And it has been said it only takes 9 seconds to refuel an EV--ie, 9 second to plug the thing in when you get home.

I'd love to steal the franken swift, but I would get caught after bragging on here about its mileage

Well, I average at least one trip a month that eats up more than 100 miles, so the Lotus Elise is a far more 'practical' car for me than the Tesla.

Now I just need to convince my wife of that fact.

[Bicycle Bob]

Well, we are still surrounded by the work of Nicola Tesla and Charles Steinmetz, but Tesla died broke. So this kind of fits. Let's hope the work lives on.

[jamesqf]

Originally Posted by jkp1187

And I don't see any justification for throwing our tax dollars at a failing company that makes luxury products for the rich.

Every new technology starts out as luxury products for the rich. Consider automobiles a century ago...

And I'll agree with the "throwing tax dollars" part, if you make it a general principle. However, if those dollars are going to be thrown somewhere (and it seems that in the current political climate they are), I would much rather see them thrown at companies like Tesla and Aptera, than at say GM.

Which, BTW, also makes luxury products for the rich. Financially, for me there would not be that much difference between say a new Escalade or (a couple of years ago) a Hummer and a Tesla, and the Tesla would be far more suited to my usual driving.

[Frank Lee]

No way. Aptera and Tesla don't pass my smell test as legit business concerns. The players only need to rake in money for a small initial period, then walk away rich, like Palmear thinks he's gonna do (or maybe has)... not that I condone it, but at least if you throw money at GM they build SOMETHING

[jamesqf]

Originally Posted by Frank Lee

The players only need to rake in money for a small initial period, then walk away rich...

But they get really rich by selling the technology to someone else, who then builds the car.

[Frank Lee]

Those guys didn't have any tech...

[jkp1187]

Originally Posted by jamesqf

Every new technology starts out as luxury products for the rich. Consider automobiles a century ago...

And I'll agree with the "throwing tax dollars" part, if you make it a general principle. However, if those dollars are going to be thrown somewhere (and it seems that in the current political climate they are), I would much rather see them thrown at companies like Tesla and Aptera, than at say GM.

Which, BTW, also makes luxury products for the rich. Financially, for me there would not be that much difference between say a new Escalade or (a couple of years ago) a Hummer and a Tesla, and the Tesla would be far more suited to my usual driving.

I do indeed oppose throwing money at GM and Chrysler as well. In fact, I will go a step further and add Nissan and Ford to the list. Far better for those companies (or their EV programs) to sink or swim on their own, and if they can't make it, let other companies absorb their facilities -- it ultimately would have been healthier for our auto industry and our country's economy. Certainly, I will not be purchasing a vehicle from those companies in the future, as they've already received enough of my money. And in Chrysler's case, this is the second bailout they've received in my lifetime.

It is indeed true that many items that started as luxuries eventually lowered in price and became commonplace for all. The reason these products are priced so high initially is so the company can recoup its initial startup investments. But by going begging to Washington, Tesla is effectively admitting that they can't charge a price that the market will support for their products and still make money. That says to me that the product cannot succeed, at least not in the current state of the market.

And while I do like the concept of EVs, (and hell yeah, as a car guy, it would be cool to have a Tesla in my garage,) the truth is by having the government pick and choose 'winners' like this, we are diverting money toward products that apparently aren't commercially sustainable for the time being. And that is money diverted away from automotive products that would be far more commercially sustainable as 'transitional' products - like diesel or CNG vehicles.

So there is more than one reason that I find the above story upsetting. But I think I hold Tesla in especial contempt because it seems to be even more badly-run than even GM, because their entire strategy appears to be looking for some next sucker to squeeze for their next cash infusion, and the company is run by a guy who (to me) seems to be more of a carnival barker than a serious businessman.

(As an aside - although I come to bury these corporate welfare queens, and not praise them, at least GM, Ford, Nissan, and Chrysler all make cars that are priced within the reach of the average American.)

EDIT: Just to make it clear - I completely understand/respect your position as well, and don't want to come off as being overly harsh (I think sometimes I unintentionally can come off that way.) I just wanted to make sure I had aired exactly why I think throwing cash at Tesla in the long run, isn't for the best....

[jamesqf]

Originally Posted by jkp1187

The reason these products are priced so high initially is so the company can recoup its initial startup investments.

Only partly. There's also the whole concept of economy of scale: that there are fixed costs (R&D, etc) that have to be amortized over the number of items made; that with practice people learn to build things better & cheaper, whether it's crankshafts or batteries; that there will be only a small "early adopter" market for a product until it becomes commonplace...

...the truth is by having the government pick and choose 'winners' like this, we are diverting money toward products that apparently aren't commercially sustainable for the time being.

I think you've gotten the reasoning almost exactly backwards. It's not that Tesla (or Aptera etc) couldn't succeed without government money. After all, selling a few thousand exotic cars at $110K or more has been a viable business model for Ferrari and others, hasn't it? But since the government has made the decision to throw money, so why shouldn't they be the ones to catch it?

...at least GM, Ford, Nissan, and Chrysler all make cars that are priced within the reach of the average American.

Unfortunately, those cars are all build to suit the tastes of the average American, too - or at least what relentless advertising has told Americans their tastes ought to be. I, thank the goddess, am not average :-)

[jkp1187]

Originally Posted by jamesqf

I think you've gotten the reasoning almost exactly backwards. It's not that Tesla (or Aptera etc) couldn't succeed without government money. After all, selling a few thousand exotic cars at $110K or more has been a viable business model for Ferrari and others, hasn't it? But since the government has made the decision to throw money, so why shouldn't they be the ones to catch it?

I don't think you've been following the story of Tesla that closely. They have not been very successful so far. Two examples from the past few months:

http://www.nytimes.com/2009/03/27/te...s/27tesla.html

Today, Tesla is facing the same plight as many green-energy start-ups. These huge, capital-intensive projects have been paralyzed by the credit crisis, and their survival depends on federal loans that have only just started to flow.... Mr. Musk has said that he underestimated the
money, time and effort needed to build a car company.

(emphasis added)

and:


Tesla Is Going Public | Autopia | Wired.com

The SEC filing provides the first clear look at the company’s finances. It notes that Tesla has lost "approximately $236.4 million from our inception through Sept. 30, 2009"....

The company has teetered on the brink of financial ruin in the past, but it has always squeaked through. Tesla got a $50 million infusion in May when Daimler bought a 10 percent stake in the company. Speculation of an initial public offering ramped up in November, but the company has largely kept mum about its finances and plans....

And speaking of the Roadster, the SEC filing contains an intriguing detail regarding its profitability: In the financial data summary Tesla says it had a profit margin of 8 percent — not anemic but not good. However, that entire margin seems dependent on zero-emission-vehicle credits, which will not be available by the time the Model S is commercially available.


Since the Roadster was arguably unprofitable even at a drive-away price of between $125,000 and $140,000, it would seem that some unspecified efficiencies would have to be part of the success story for a vehicle with an MSRP touted to be half that — $57,000 before the federal tax credit.

(emphases added).


Again, if you believe it's going to be a good long-term investment, I encourage you to walk the talk. I think it would be good for the country if an American company could successfully run a business manufacturing electric vehicles on a large scale.

I personally, however, would not care to throw my money at this company, and the reason I keep pressing the issue is because I am not particularly happy about being compelled to do so. The fact that something has been a successful business model for Ferrari does not mean that (a) just anyone can be successful at a similar business model or (b) that supporting that business is an appropriate role for the federal government. It isn't fair to the taxpayers, who may have preferred to support other investments with that money.

[MetroMPG]

Originally Posted by ShadeTreeMech

Even living in the rural area I live I don't generally drive more than 40 miles before i come home again. that is within the range of most battery powered cars.

...

I'd love to steal the franken swift, but I would get caught after bragging on here about its mileage

Or at least somewhat annoyed after running out of juice trying to go 40 miles in it.