Tesla is a success?

The Energy Department awarded the Tesla Motor Company a $465 million low-interest loan in 2009 that was delivered in 2010, and President Obama and the State of California has provided generous subsidies for electric vehicles to Tesla since.


So, how did this come about?
In 2010, Tesla was awarded a milestone-based loan by the DOE as part of the Advanced Technology Vehicle Manufacturing program. This program was signed into law by President Bush in 2008 and then awarded under the Obama administration in the years that followed.

Now Tesla has since repaid its federal loan nine years ahead of schedule (with interest).
So, in addition to payments made in 2012 and the first quarter of 2013, its May payment of $451.8 million repaid the remaining loan and all the interest. Following this payment, Tesla will be the only American car company to have fully repaid the government.

Ahh, but the devil is in the details! Tesla raised $830 million in new stock and debt offerings, which it used to repay ahead of schedule its loan from the Energy Department.


Elon Musk (the CEO) said he himself would buy $100 million of the offerings, and with that the stock climbed still higher. Musk actually borrowed $150 million from Goldman Sachs (you mean the banking outfit for the Obamanation? Shocking!) That’s how we, the taxpayers, were repaid.

Okay, so you might believe the government should pick winners and losers with the money they confiscate from the tax payers, but this is socialism by definition, and when you figure in the campaign contributions he made to the Obamanation (Musk officially donated $5,000 to Barack Obama’s campaign), then crony capitalism is more apropos.

But even with all this crony capitalism is this a real success story?
There were enough high-end customers to supply Tesla around $400 million in gross receipts last quarter (that would be 5,000 cars at an average of $80,000 a copy), but Tesla still lost money (technically anyway).
Interestingly, this year Tesla would have had a first-quarter loss without the $68 million sale of special credits created by California regulations that reward makers of “zero-emission” vehicles, and dollar-per-dollar the ZEV credits have provided more assistance to Tesla ($13,600 per car) than have federal incentive programs ($7500 per car).

Take Fiat in comparison. In the first quarter of 2013, Fiat sold 1 million cars and made $40 million in profit.
Tesla  on the other hand sold 4,900 cars and, not counting the sale of regulatory credits under California law, lost $53 million, or more than $10,000 per car.

Think about this for a minute; Tesla made $40.5 million, or $13,600 a car, through the sale of ZEV and other credits to other car companies in 2012.

Yes, Tesla didn’t generate a profit by selling sexy cars, it made money by selling emissions credits mandated by the state of California’s electric vehicle requirements. To be exact, $13,600 per car was paid by other manufacturers, who are going to pass at least some of that cost on to buyers of their products (cars). The result is that people buying a new car are likely going to pay more than simply the direct tax subsidy. To put it another way, the more they sell, the more we pay.

Now, even a lowly biology grad can see that $40 million profit is $93 million more than a loss of $53 million.

So, without the huge success in Tesla’s IPO and subsequent meteoric rise in its stock, there is nothing here.
Does this sound familiar? The company’s share price is selling for roughly 600 times its estimated 2013 earnings. Can you say “Tech Bubble”?

Subsidies per Tesla car sold:
tax-back bonus (paid for by every taxpayer)
California State subsidy (paid for by every California taxpayer)
emissions credits (paid by other car companies)
$23,600 total subsidies

Does this mean I get the Testla on the weekends?