01-20-2014, 12:45 PM
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The People's Post
Industry Role:
Join Date: Dec 2008
Location: invisible 7-11
Posts: 64,233
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Quote:
Tesla Is No Success Story.
With the recent news that it repaid its $465 million low-interest loan from the Department of Energy, it's now being heralded as a success story worthy of redeeming the failures of a green-energy subsidy program that has included the likes of Solyndra, Abound, Ener1, and Fisker Automotive. Since then, Tesla's stock value has more than doubled and the company is currently valued at around $12 billion.
Tesla's success is ultimately a case study in the perils of government-granted privilege, its financial success demonstrating a reliance on political favoritism more than an ability to create value for customers. Tesla Motors would not have been created were it not for the generosity of politicians – if generosity is the right term for spending taxpayers' money.
The company began with a loan funded through the Advanced Technology Vehicle Manufacturing program, which was signed into law by President Bush; the loan was later awarded after President Obama took office. In Tesla's press release announcing that it had paid back this low-interest loan, the company was careful to thank all of those who made it possible, including "the Department of Energy and the members of Congress and their staffs that worked hard to create the ATVM program."
Along with the federal loan, Tesla also relies on support from politicians through a complex series of federal and state subsidies. For each purchase of a new Tesla acquired for personal use, the federal government offers a $7,500 federal tax credit. In addition, various states offer additional income-tax credits, including $6,000 in Colorado and $7,500 in West Virginia.
These subsidies have become so central to Tesla's business model that it advertises them to customers as a way to cover the cost of a down payment. And for states that do not yet offer subsidies for electric cars? Tesla's website provides links to help consumers encourage state and local legislators to subsidize the purchase of such vehicles. The company's site even goes so far as to recommend consulting a tax professional.
Even with the support of federal and state politicians, Tesla would still be reporting losses were it not for its ability to profit off of other auto manufacturers in California. In the first quarter of 2013, Tesla reported its first-ever quarterly profit by using special credits from California's Air Resources Board, which rewards auto manufacturers for the production of "zero-emission" vehicles. So far this year, Tesla was able to turn what would have been a $57 million loss into an $11 million gain by selling $68 million worth of these credits to other auto manufacturers in California.
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http://www.usnews.com/opinion/blogs/...cal-favoritism |
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