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The (Hilarious) Bailout of Silicon Valley Auto Maker Tesla
This weekend Tesla Motors was back in the news as they are pleading with the U.S. government to give them some $400 million to continue their mission of building cars for the "rich". I say "give them" because even though the money is apparently a loan, if Tesla goes under, it then becomes "give them". Randall Stross from the NY Times wrote a piece which apparently bashed Tesla. In response, Tesla sent their first line of blogging defense, Mahalo CEO Jason Calacanis to take care of the matter. Calacanis has posted a number of counter-arguments to Stross’ post and I’d like to comment on the Calacanis post.
First, let’s begin with a number of disclosures. Something that you would think the $100 million-valued Huffington Post would require of their authors but apparently that’s not the case. Calacanis’ company Mahalo has received funding from Tesla Motors CEO Elon Musk. In addition, Jason’s brother-in-law and Mahalo investor Ryan Scott is also a Tesla Motors investor. Boy that’s something the readers of the Huffington Post piece should know, right?
As many of you know, I am a public transportation junkie. My belief is that all (or most) government funding should be used towards pushing mass transit. Creating cars powered by batteries, water, or anything else won’t fix our growing traffic issues. Take the millions and billions of dollars and create better transit systems in cities across this country. There’s so much that can be done with transit to create real environmental and human savings.
If we are going to look at ways to save oil, why not spend the money creating more efficient air travel? I have to imagine that the savings up in the sky would be larger than those on the ground but yet I never hear anyone talking about fixing air travel.
Ok, now let’s talk about cars and what appears to be the hot trend now, battery-powered cars. I am no expert in battery-technology but if the concensus is to move forward building batteries for cars, I am all for it. However, instead of dropping hundreds of millions into Tesla, put it into the great universities across this country. Create a cross-university research center where students, scientists and industry professionals can work together to create the battery technology. Once it’s perfected, then it could be sold/leased/provided to companies like Tesla. This would be a much safer investment than giving money to frankly any auto-company at this time. I bet this type of research project could even draw in some of our worldwide allies and help slowly regain some of our lost status in the worldwide community.
I haven’t seen anything from Tesla that speaks to the average American family. A $60k sedan isn’t for the average American family. Calacanis’ math is interesting — a person making $80k should be able to easily afford a $60k car. Boy that’s exactly how we got into the mortgage hell we are in now – people living beyond their means! And Tesla hasn’t displayed the leadership that would be needed for me to believe that they would be able to remain a going concern long enough to repay any loan. How many CEOs have they been through so far?
At the end of the day, we need better ways to move people from place A to place B. All transportation options should be considered and creating expensive cars isn’t the way to accomplish what we’re looking for.
Update: Philip James points us to this illustration of why we need more transit: