[cripplecreek]

Tesla Is No Success Story Tesla is only profitable thanks to politics and tax subsidies.

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.

[dangus]

To those who sniff that Tesla generates a profit only because of tax subsidies: The tax subsidies come to $7,500 per vehicle. That means that even if the tax subsidies were to end, and Tesla were to have to discount its prices to make up for that (which is highly questionable, since they can’t keep up with demand), Tesla would still generate an incremental profit of more than $12,000 per vehicle.

So what’s this about Tesla being barely profitable? Tesla is resinking all of the per-vehicle profit into developing larger production capabilities and creating still newer technologies.

Could they go bankrupt? Their market capitalization is based on vehicle sales 40 times their sales volume, and 20 times their current assets. In other words, no matter how short of funds they ran, they could easily sell more stock to raise more funds. Even if doubling the amount of outstanding stock meant quartering their stock price, they would still generate five times more cash than their entire current assets.

Bottom line: The government subsidies have meant more profit per vehicle, but also higher costs and higher competition. Because of the GM bailout, for instance, Tesla had to build a new factory from scratch, rather than buy one from GM at pennies on the dollar.

[dangus]

... as far as an investment goes, however, Tesla’s stock is probably inflated... but Tesla would be viable with a stock price a fraction of what it is.

... as far as environmentalism goes, in the short run, no-one should fool themselves. The reason to buy a Tesla is pure consumerism, and consumerism means f*** the environment. At $69,000, there’s no way the added resource exploitation is going to balance the fuel savings. You want to save the environment, buy a used Prius. HOWEVER, in the long run, Tesla is financing an electrical-car infrastructure which will ultimately mean far less fuel consumption. Those idiots who say, “yeah, but you still have to fuel the electrical grid” don’t get it: Teslas get a fuel efficiency equivalent of waaaayyy over 100 MPG.