Why Tesla should get a $400 million bailout

There’s much discussion in the tech blogosphere about the request from Silicon Valley’s favorite electric car make Tesla for a $400 million bailout…sorry “loan” from the US Government.

There’s points on either side, so as best I can I’ll explore both cases, and conclude in the positive.

Against

Tesla makes niche expensive sports cars, and even then has struggled at doing that. The company may have high ideals, but they are not well equipped for mass market products.

They also make vehicles for the rich. As much as I respect and admire Jason Calacanis, his suggestion that a new $60,000 Tesla “family car” is affordable in his latest email (reprinted here) shows a complete lack of understanding of affordability. $60,000 for a car is a lot of money and the average family would struggle to buy a $60,000 car good times, let alone bad times.

It’s also a bad investment with no guarantee of a return. Tesla has always struggled, and how a $60,000 family car in a deep recession will improve their outlook is beyond me. Sure, they make shiny, pretty electric cars, but why should the taxpayer support that?

For

Everyone else is getting a bailout, why not Tesla.

Conclusion

We live in strange times, a period in history of unprecedented Government intervention in the market, where Government has ceased to be for the greater good, and is instead now picking favorites with taxpayer money, propping up failed businesses who mostly have no one else to blame for their positions other than themselves. The bailout is obscene by any stretch of the imagination, and now that the door is open there would appear to be no end of companies that want their share.

Given companies far more incompetent than Tesla, such as Ford and GM are getting some money, there’s something perversely fair and equatable about Tesla getting a share of the money as well. That is, sadly, the case for, but given context, it is the stronger of the two arguments.

Also see Allen Stern for another take, with the suggestion that the money would be better spent investing in public transport.