Tesla Says Money Shouldn’t be Diverted to Bailout Car Makers
After the big three Detroit auto makers essentially had their rear-ends handed to them in a bag by Washington politicians last week, they have been scrambling to find ways to get the money they feel they need to stay alive — and their proposed solutions are making Tesla cringe.
Last year, when the US congress passed the Energy Independence and Security Act (EISA), a $25 billion fund called the “Advanced Technology Vehicle Manufacturing Incentive Program” (ATVM) was established to help new and existing auto makers re-tool their operations to bring next generation car technologies to market quickly. Just this month, the program started accepting applications for funds from interested parties.
- » See also: Factory Five Electric ‘33 Ford Roadster Debuts at SEMA
- » Get Gas 2.0 by RSS or sign up by email.
But in all the hubbub surrounding the downfall of the established American auto manufacturers, one of the ideas apparently being floated by the CEOs of GM, Ford and Chrysler is to convert some or all of that $25 billion into what amounts to a bailout.
Needless to say, car makers like Tesla aren’t happy about this strategy. Tesla has applied for funding from the ATVM to undertake two projects — an Advanced Battery and Powertrain Manufacturing facility and a manufacturing facility to build their upcoming five-passenger electric sedan known as the “Model S.”
So, in a Thanksgiving blog post, Diarmuid O’Connell, Tesla Motors’ Vice President of Business Development, categorically outlines how shifting any of the ATVM $25 billion into a bailout “would be an enormous mistake,” adding that “the original spirit and intent of the program is critical for the nation’s economic security – and the importance of the program is even greater given the harrowing economic climate.”
I happen to fully agree with Tesla on this one. That money is intended to rectify the problems that got the big three into trouble in the first place — that being their lack of foresight and desire for change. As New York Times contributor Micheline Maynard has said, “Detroit [has] proved yet again that it [has] not understood the psyche of American consumers.”
In other words, Detroit missed the boat and made a fatal strategic calculation that people would continue to buy larger and larger cars without nary a second thought. Does that mean we shouldn’t bail them out at all? Maybe so, maybe not… I’m still not convinced we shouldn’t save the big three in some form.
As Mitch Albom said in a Detroit Free Press article last week, if we let the big three die we let our “national spine collapse. America can’t be a country of lawyers and financial analysts. We have to manufacture. We need that infrastructure. We need those jobs. We need that security. Have [we] forgotten who built equipment during the world wars?”
Nonetheless, I don’t think the ATVM money should be used for anything other than bringing our car technologies into this century. So on this point Tesla is right. I take it a step further though and say that perhaps we do need to save Detroit, but we need to do it in a way that doesn’t penalize the car companies that have been doing it right.
Image Credit: Tesla Motors
Just let them flounder and let the clean tech companies snatch up their assets. German SolarWorld already put in a bid to buy Opel, a GM subsidiary: http://www.onelectriccars.com/solar-company-eying-gm-prey/500/
Tesla is complaining because they are in poor financial shape as well and don’t want to see their competitors bailed out. It is a shame as I would like to see an electric car make it.
The Error in thinking is as follows :
Sure electric and hybrid vehicles are a reasonable alternative.
BUT, an even better alternative exists, namely, closed cycle hydrogen peroxide engines.
The technology existed at the end of World War 2, and was initially developed for torpedo propulsion. It employed a V8 motor that consumed it’s own exhaust gasses, and propelled the torpedo at 40 knots for over 10,000 yards. The US Navy captured the motor (Jumo 48 was it’s nomenclature at that point) and it, and the associated technology promptly disappeared from public view (it is thought because the then new Nuclear Technology didn’t need any rivals), along with practically every application and example of Hydrogen Peroxide Technology.
Given the technological ability these days, manufacturing and maintaining such propulsion systems for motor vehicles would present no more of a difficulty or challenge than the modern electric/ electric-plugin-hybrid technologies.
Yet, Hydrogen Peroxide Technology remains ignored, and is also a good developmental stepping stone to advance and employ while the hybrid, plugin hybrid, and electrical technologies mature. In combination as an integral part of a plugin hybrid system that Does Not rely on fossil fuels, Hydrogen Peroxide Technology presents and ideal opportunity, which remains utterly unexploited, to the future cost of us all.
Tesla shouldn’t talk they’ve already been in trouble once this year.
Taken from another site on 10/16
“Tesla notifies Detroit workers already-in-the-know they were laid off two days ago…today! In a sign of what this new Financiapocalypse might bring, employees in the Metro Detroit branch of electric car maker Tesla Motors were laid off via a blog post. Yesterday, we reported that Tesla would be cutting back and reorganizing, which included shutting down the office in Rochester Hills, near Detroit. Unfortunately, no one told the employees in Rochester Hills. Some of them logged on to find that they were now, according to their own website, obsolete. But it gets worse.
We’re hearing that approximately 90 Tesla employees, or 90% of the Detroit office, was simply let go, and the remaining employees have to make their way to the San Carlos headquarters with no moving costs covered, no increase in salary and no help getting rid of their old homes.”
The author implies that the big 3 made a wrong turn to get where they are now, and I think that is being too generous. The big 3 have made dozens of wrong turns (you can argue that they have been off course for decades), which is why foreign companies have been chipping away at their marketshare since the 60’s.
The fact is that the leadership at these companies is incompetent (at least compared to many of their competitors) and as a condition of any bailout the leadership should be replaced and the taxpayers should become stockholders in the companies. Being part owner in a company is good incentive to buy that company’s products! When the companies recover they can buy back their stock.
In any case, the companies that are actually innovating like Aptera, Tesla and AC Propulsion should be getting at least as much support as these giant losers.
On another note, perhaps companies that grow too large to let fail should be required to buy some sort of insurance to bail them out in case of catastrophic management or malfeasance, rather than having the taxpayers do it.
As a component manufacturer, we make electric powertrains, currently converting the GM Saturn Sky to all-electric power. Our prototype is running on the road now, and we are filling orders. We believe this technology is one solution to advancing automotive thinking, for delivery of all-electric vehicles in 2009.
http://www.ampmotorworks.com
Folks, especially Jeff N who writes we should put the guys from Tesla in charge,
Uh… which guys? The fact is that they are on their 4th CEO in 12 months. Why? Because no one can make a go of Tesla, so far. And they have basically admitted that the idea of a bunch of non-auto industry people creating a car company is a disasterous plan. They are scramblig to hire industry people to make the thing work.
They have burned through millions in investment capital and written a lot of press releases. Yet they have not produced and sold a thing. They have not employed millions of Americans for more than 100 years like GM and Ford.
And in-fact, Ford has “fired their asses” as you suggest by bringing in CEO Alan Mullaly who spent 37 years at Boeing and is credited with saving that company with a dramatic post 9-11 restructuring. He has been fixing Ford. He has been executing a plan and it has much support from experts.
Now that the financial crisis has blown up every automakers plan, including Toyota, Honda, Nissan and the rest, industry “experts” are attacking with no understanding of the business.
We should compromise and put the Tesla and other electric car company execs in charge of Detroit.
Uyraell talks about the closed cycle hydrogen peroxide (H2O2) cycle engine. The technology for this engine is not secret or hidden away. The problem is that this technology has very limited application. A torpedo that is running on a carbon-based fuel needs a source of oxygen to be able to run. Unfortunately, a torpedo runs under water and therefore has a hard time coming up with the needed oxygen. H2O2 was used because it could be run through a catalyst and would quickly break down into H20 and O2, which was used used to burn the fuel. Liquid fueled rocket motors have used this technology since before WWII, hardly secreted away.
Today, torpedoes are, for the most part, steam, electric, or exotic carbon-fuel based. Oxidizers have moved beyond H2O2, using more efficient oxidizers.
Wow put Tesla’s execs in charge! No flippin way. Come on people think before you write. These guys are whining because there is a very good chance they will go under without the AVTM money. They seem to have a good product, but they have not even produced the vehicles they pre-sold. As for the big 3 any bailout that does not force the dissolution of the UAW is a farce and a temporary stop gap. As long as they are tied to the lead balloon they will fail. Force the big 3 to go chapter 11, eliminate all labor contracts, rehire all the workers that actually want a job at the same rate as the big Japanese 3, and retool their plants to make more efficient and reliable cars. As to the AVTM funds, I really feel they should stay separate and used only for alternative fuel source vehicles. EV’s, bio-fuels, and fuel cell companies need all the help they can get right now.