4 ms·

Only the Rich Can Afford It. Should Taxpayers Back It?

27 points by peter123 18y ago

kqr2 18y ago
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.
- vaksel 18y ago
  their less expensive 5 seat sedan is still a 60K car, hardly fits yours average budget
  - deleted 18y ago
    [deleted]
  - tomjen 18y ago
    In Denmark that would be an upper middle class car.
    - neelk 18y ago
      In Denmark the car tax would turn a $60,000 car into a $168,000 one, right?
      - marvin 18y ago
        What he's saying is that Americans whine a lot about how expensive things are.
Hoff 18y ago
Tesla manages to have PR coverage far out of proportion to the norm. They remind me of Second Life, at least in some regards.
DenisM 18y ago
Unlike the big 3, Tesla can actually grow into a valuable asset for this country. Advanced, non-commoditized technology, oil independence, clean air...
- ckinnan 18y ago
  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.
  - DenisM 18y ago
    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.
- mhb 18y ago
  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.
mixmax 18y ago
Why should taxpayers back Detroit?
- Zev 18y ago
  Last time I checked, Tesla wasn't based in Detroit.
  - mixmax 18y ago
    I meant why should taxpayers bail out the big companies in Detroit.
    - ibsulon 18y ago
      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.
      - mixmax 18y ago
        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.
dcurtis 18y ago
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?
- Prrometheus 18y ago
  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.
  - wmf 18y ago
    Didn't Mark Twain say that most people want less government corruption or more opportunity to participate in it?
  - newsycaccount 18y ago
    Who are you, Walter Lippman?
- peter123 18y ago
  Tesla makes electric cars targeted at the wealth. There are plenty of other electric car companies making cars that are way less than $100k.
  - dcurtis 18y ago
    Which companies?
- fallentimes 18y ago
  Tax payers shouldn't be subsidizing for-profit businesses.
ars 18y ago
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.
sethg 18y ago
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.
- lutorm 18y ago
  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.
  - jimbokun 18y ago
    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.
lutorm 18y ago
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...
- newsycaccount 18y ago
  Then shouldn't the government just invest in fundamental battery tech, not car-implementation that will never go anywhere without improvements in that tech?
  - twopoint718 18y ago
    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.
- deleted 18y ago
  [deleted]
mattmaroon 18y ago
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.
jimbokun 18y ago
"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.
TobiasCassell 18y ago
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?
timcederman 18y ago
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.
- flashgordon 18y ago
  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)?
  - timcederman 18y ago
    "Upper middle class" then. The thing is that I know many families with a leased 100k car who aren't "rich"...

27 points by peter123 18y ago

kqr2 18y ago

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.

vaksel 18y ago
their less expensive 5 seat sedan is still a 60K car, hardly fits yours average budget
- deleted 18y ago
  [deleted]
- tomjen 18y ago
  In Denmark that would be an upper middle class car.
  - neelk 18y ago
    In Denmark the car tax would turn a $60,000 car into a $168,000 one, right?
    - marvin 18y ago
      What he's saying is that Americans whine a lot about how expensive things are.

Hoff 18y ago

Tesla manages to have PR coverage far out of proportion to the norm. They remind me of Second Life, at least in some regards.

DenisM 18y ago

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

ckinnan 18y ago
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.
- DenisM 18y ago
  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.
mhb 18y ago
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.

mixmax 18y ago

Why should taxpayers back Detroit?

Zev 18y ago
Last time I checked, Tesla wasn't based in Detroit.
- mixmax 18y ago
  I meant why should taxpayers bail out the big companies in Detroit.
  - ibsulon 18y ago
    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.
    - mixmax 18y ago
      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.

dcurtis 18y ago

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?

Prrometheus 18y ago
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.
- wmf 18y ago
  Didn't Mark Twain say that most people want less government corruption or more opportunity to participate in it?
- newsycaccount 18y ago
  Who are you, Walter Lippman?
peter123 18y ago
Tesla makes electric cars targeted at the wealth. There are plenty of other electric car companies making cars that are way less than $100k.
- dcurtis 18y ago
  Which companies?
fallentimes 18y ago
Tax payers shouldn't be subsidizing for-profit businesses.

ars 18y ago

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.

sethg 18y ago

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.

lutorm 18y ago
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.
- jimbokun 18y ago
  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.

lutorm 18y ago

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...

newsycaccount 18y ago
Then shouldn't the government just invest in fundamental battery tech, not car-implementation that will never go anywhere without improvements in that tech?
- twopoint718 18y ago
  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.
deleted 18y ago
[deleted]

mattmaroon 18y ago

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.

jimbokun 18y ago

"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.

TobiasCassell 18y ago

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?

timcederman 18y ago

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.

flashgordon 18y ago
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)?
- timcederman 18y ago
  "Upper middle class" then. The thing is that I know many families with a leased 100k car who aren't "rich"...