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This deal is being underwritten by U.S. taxpayers, who have given Tesla several hundred million dollars in loans (in exchange for zero equity). I suppose there

This deal is being underwritten by U.S. taxpayers, who have given Tesla several hundred million dollars in loans (in exchange for zero equity). I suppose there's now a slightly better chance that some of those loans will actually get repaid...

Symmetry 15y ago
Well, if we don't want them to get these huge loans and tax breaks (like GE) we shouldn't elect politicians promising to create "green jobs."
jbooth 15y ago
How much did the taxpayers give the oil industry last year again? Pretty sure the number starts with a B, and >10 of them. Meanwhile, I love the idea of us selling electric power trains to the Japanese, rather than them selling them to Detroit. Makes me feel like we're doing something right.
- deleted 15y ago
  [deleted]
- watchandwait 15y ago
  Reduced taxes on profitable oil companies are not the same as non-recourse taxpayer loans for 100 times the revenue of Tesla. And it isn't "us," the Germans and Toyota are equity stakeholders in Tesla.
  - jbooth 15y ago
    Sure they are, if you reduce taxes on one targeted industry without regard to the prevailing tax rate, it's effectively a subsidy. Carving out a tax break specifically for oil is like handing them money compared to other industries who have to pay the full rate. The difference between that and the interest subsidy to Tesla is that it's much bigger and Tesla at least arguably represents a legitimate reason to distort the market. Good for Germany and Toyota. The tech will be here, they'll be playing catchup, or explicitly neglecting their own tech because they have cheap access to ours.
    - ams6110 15y ago
      Reduced taxes or tax breaks for an industry lets them keep more of what they earn and do something useful with it. Taxpayer funded subsidies are like taking money out of your wallet and setting it on fire, most of the time.
      - mkramlich 15y ago
        > Reduced taxes or tax breaks for an industry lets them keep more of what they earn and do something useful with it. like coke and hookers and yachts
      - jbooth 15y ago
        Can you explain the difference as far as balance sheets? Gov't - down money Recipient - up money Does the mechanism really matter? EDIT: Hypothetically, let's say the government gave one company a direct subsidy, another a tax rebate, and a third a targetted one-company-only tax break, all for X dollars. You're saying these are substantially different from a macroeconomic perspective? And different enough that a few million in one method is egregious while 50 billion via another method is just how things should be?
        firemanx 15y ago
        One is real dollars (subsidy), one is potential dollars - tax revenue doesn't exist without actual revenue to create it. If the business bankrupts without ever making a dime, you haven't lost anything through a tax break. If you give the business 100 million in capital and they bankrupt, you've just lit 100 million of our tax dollars on fire. To add to this, looking at the upside of the risk: If the company is successful with a subsidy or a loan, they've first got to make up the raw dollar value of the subsidy (in extra taxes) or loan (in repayments) before additional taxes become an ROI. If the company is successful with a tax break, they can start reaping rewards right away as (assuming there is some limited taxation involved), tax revenues increase with volume. However, with either option you're still gambling with public funds and policy and there are many ways to screw the public fiscally. I'm personally against using the tax code for social engineering purposes (punitive, stimulative, or otherwise), and doubly against subsidies in nearly all cases.
- forkandwait 15y ago
  In the last six months, I shifted my loyalty to Toyota from lame US car companies. I respect Toyota -- as a maker of fantastic cars, a moderate-thinking and compensating long term business, and as a good employer of US citizens. US car manufactures make shitty cars, sell out their future for bonuses for their shitty executives, and treat their unionized employees like shit (and according to NPR more of a Toyota is built in the US than a US car). I am proud to support Toyota, and the sooner the Big Three are forced to sell out out to "the japanese" the better.
  - smhinsey 15y ago
    For what it's worth, Toyota built a plant in my hometown and of the 4 people I know who got jobs there, all of them eventually quit due to the anti-union shenanigans pulled by management. They are a good company, but not without their flaws. (And to be fair, I'm not sure how much of this behavior was influenced by corporate policy vs. typical small town closemindedness.)
    - forkandwait 15y ago
      You know, I don't support unions as automatically as I used to. From my amateur interest in Toyota and industrial management, one of the major problems with unions isn't wages but inflexible work rules, seniority attached to certain very minutely defined jobs and no accompanying cross training/ rotation, and general bad attitude.
      - smhinsey 15y ago
        I've never worked for one, but it wasn't an ideological thing. If you worked with people for more than 6 months or so, you'd get your team broken up. If management found out that you were friends with a group of coworkers and were getting together outside of work, you'd get reassigned so none of you were working together. It was the harassment to prevent people from unionizing that that made it a bad working environment.
        15y ago
sliverstorm 15y ago
Your equity is in the electric vehicle future. For heaven's sake, this means Tesla may be turning in the direction of "profitable". Aren't you at least happy about that?
cjoh 15y ago
Seems fine by me. Government's pretty good at financing long-term innovation like this. See, for instance, the Internet.
- OstiaAntica 15y ago
  None of the pioneers of the internet cashed out in a shady IPO financed by Uncle Sam.
  - cjoh 15y ago
    I guess it depends on how you look at it. Every internet IPO was financed by Uncle Sam in my mind.
kloncks 15y ago
I'm stumped by this view. And here I was thinking it's near-impossible to criticize a company that might finally be profitable while creating a new clean-energy car tech hub right here in the United States...
- jbooth 15y ago
  Well, Al Gore supports this company. So, you know how it goes.
pbreit 15y ago
That doesn't make any sense. How is the "deal being underwritten by by US taxpayers"? Toyota is paying Tesla for equipment. Equity is typically not exchanged for a loan (that's why it's a loan). By slightly better, are you meaning 97% verus 96%?
- watchandwait 15y ago
  The point is that when someone invests speculative venture capital, which is what the U.S. did when it provided nearly half a billion dollars to a company with almost no revenue and no track record, that investor should get SERIOUS equity. Instead, the cronies at Tesla got a loan at a subsidized interest rate, and taxpayers got no upside and 100% downside in the likely event that Tesla fails.
  - sanswork 15y ago
    The upside would be as follows 1. Future taxable income 2. Jobs 3. Chance to create a CoE for electric cars domestically(which feeds back into 1 and 2)
    - hncommenter13 15y ago
      Chrysler got loan guarantees from the US government back in the 1980s (which may or may not have been a good idea), and the USG got warrants. Those warrants ended up being rather valuable, and the government took in hundreds of millions. Personally, I don't think this is the proper role for government, but at least the lenders (us) should get a good deal. There is no reason the USG couldn't have similarly received warrants as part of the Tesla loan guarantee, or at least a pledge from the insiders not to sell stock until we had been repaid--to better put Musk and his benefactors, you and me, on the same side of the table. Also, what do you think that future taxable income comes to, discounted to the present at a discount rate that reflects the risk/uncertainty of those cash flows? We could pay people $400M to dig ditches or paint each others' portraits if all we want is jobs. If private enterprise can't create and sustain the need for that job over the long term, all we're doing is buying paintings from mechanical engineers.
    - 15y ago

Symmetry 15y ago

Well, if we don't want them to get these huge loans and tax breaks (like GE) we shouldn't elect politicians promising to create "green jobs."

jbooth 15y ago

How much did the taxpayers give the oil industry last year again? Pretty sure the number starts with a B, and >10 of them. Meanwhile, I love the idea of us selling electric power trains to the Japanese, rather than them selling them to Detroit. Makes me feel like we're doing something right.

deleted 15y ago
[deleted]
watchandwait 15y ago
Reduced taxes on profitable oil companies are not the same as non-recourse taxpayer loans for 100 times the revenue of Tesla. And it isn't "us," the Germans and Toyota are equity stakeholders in Tesla.
- jbooth 15y ago
  Sure they are, if you reduce taxes on one targeted industry without regard to the prevailing tax rate, it's effectively a subsidy. Carving out a tax break specifically for oil is like handing them money compared to other industries who have to pay the full rate. The difference between that and the interest subsidy to Tesla is that it's much bigger and Tesla at least arguably represents a legitimate reason to distort the market. Good for Germany and Toyota. The tech will be here, they'll be playing catchup, or explicitly neglecting their own tech because they have cheap access to ours.
  - ams6110 15y ago
    Reduced taxes or tax breaks for an industry lets them keep more of what they earn and do something useful with it. Taxpayer funded subsidies are like taking money out of your wallet and setting it on fire, most of the time.
    - mkramlich 15y ago
      > Reduced taxes or tax breaks for an industry lets them keep more of what they earn and do something useful with it. like coke and hookers and yachts
    - jbooth 15y ago
      Can you explain the difference as far as balance sheets? Gov't - down money Recipient - up money Does the mechanism really matter? EDIT: Hypothetically, let's say the government gave one company a direct subsidy, another a tax rebate, and a third a targetted one-company-only tax break, all for X dollars. You're saying these are substantially different from a macroeconomic perspective? And different enough that a few million in one method is egregious while 50 billion via another method is just how things should be?
      - firemanx 15y ago
        One is real dollars (subsidy), one is potential dollars - tax revenue doesn't exist without actual revenue to create it. If the business bankrupts without ever making a dime, you haven't lost anything through a tax break. If you give the business 100 million in capital and they bankrupt, you've just lit 100 million of our tax dollars on fire. To add to this, looking at the upside of the risk: If the company is successful with a subsidy or a loan, they've first got to make up the raw dollar value of the subsidy (in extra taxes) or loan (in repayments) before additional taxes become an ROI. If the company is successful with a tax break, they can start reaping rewards right away as (assuming there is some limited taxation involved), tax revenues increase with volume. However, with either option you're still gambling with public funds and policy and there are many ways to screw the public fiscally. I'm personally against using the tax code for social engineering purposes (punitive, stimulative, or otherwise), and doubly against subsidies in nearly all cases.
forkandwait 15y ago
In the last six months, I shifted my loyalty to Toyota from lame US car companies. I respect Toyota -- as a maker of fantastic cars, a moderate-thinking and compensating long term business, and as a good employer of US citizens. US car manufactures make shitty cars, sell out their future for bonuses for their shitty executives, and treat their unionized employees like shit (and according to NPR more of a Toyota is built in the US than a US car). I am proud to support Toyota, and the sooner the Big Three are forced to sell out out to "the japanese" the better.
- smhinsey 15y ago
  For what it's worth, Toyota built a plant in my hometown and of the 4 people I know who got jobs there, all of them eventually quit due to the anti-union shenanigans pulled by management. They are a good company, but not without their flaws. (And to be fair, I'm not sure how much of this behavior was influenced by corporate policy vs. typical small town closemindedness.)
  - forkandwait 15y ago
    You know, I don't support unions as automatically as I used to. From my amateur interest in Toyota and industrial management, one of the major problems with unions isn't wages but inflexible work rules, seniority attached to certain very minutely defined jobs and no accompanying cross training/ rotation, and general bad attitude.
    - smhinsey 15y ago
      I've never worked for one, but it wasn't an ideological thing. If you worked with people for more than 6 months or so, you'd get your team broken up. If management found out that you were friends with a group of coworkers and were getting together outside of work, you'd get reassigned so none of you were working together. It was the harassment to prevent people from unionizing that that made it a bad working environment.
      - 15y ago

sliverstorm 15y ago

Your equity is in the electric vehicle future. For heaven's sake, this means Tesla may be turning in the direction of "profitable". Aren't you at least happy about that?

cjoh 15y ago

Seems fine by me. Government's pretty good at financing long-term innovation like this. See, for instance, the Internet.

OstiaAntica 15y ago
None of the pioneers of the internet cashed out in a shady IPO financed by Uncle Sam.
- cjoh 15y ago
  I guess it depends on how you look at it. Every internet IPO was financed by Uncle Sam in my mind.

kloncks 15y ago

I'm stumped by this view. And here I was thinking it's near-impossible to criticize a company that might finally be profitable while creating a new clean-energy car tech hub right here in the United States...

jbooth 15y ago
Well, Al Gore supports this company. So, you know how it goes.

pbreit 15y ago

That doesn't make any sense. How is the "deal being underwritten by by US taxpayers"? Toyota is paying Tesla for equipment. Equity is typically not exchanged for a loan (that's why it's a loan). By slightly better, are you meaning 97% verus 96%?

watchandwait 15y ago
The point is that when someone invests speculative venture capital, which is what the U.S. did when it provided nearly half a billion dollars to a company with almost no revenue and no track record, that investor should get SERIOUS equity. Instead, the cronies at Tesla got a loan at a subsidized interest rate, and taxpayers got no upside and 100% downside in the likely event that Tesla fails.
- sanswork 15y ago
  The upside would be as follows 1. Future taxable income 2. Jobs 3. Chance to create a CoE for electric cars domestically(which feeds back into 1 and 2)
  - hncommenter13 15y ago
    Chrysler got loan guarantees from the US government back in the 1980s (which may or may not have been a good idea), and the USG got warrants. Those warrants ended up being rather valuable, and the government took in hundreds of millions. Personally, I don't think this is the proper role for government, but at least the lenders (us) should get a good deal. There is no reason the USG couldn't have similarly received warrants as part of the Tesla loan guarantee, or at least a pledge from the insiders not to sell stock until we had been repaid--to better put Musk and his benefactors, you and me, on the same side of the table. Also, what do you think that future taxable income comes to, discounted to the present at a discount rate that reflects the risk/uncertainty of those cash flows? We could pay people $400M to dig ditches or paint each others' portraits if all we want is jobs. If private enterprise can't create and sustain the need for that job over the long term, all we're doing is buying paintings from mechanical engineers.
  - 15y ago