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U.S. News and Commentary



Wednesday
Nov142012

Tesla model named Motor Car of Year after DOE tweaks $465 million taxpayer loan

Obama's Energy Dept. currently has an initiative to make electric vehicles more affordable. Taxpayers have been forced to fund commercial endeavors like Tesla. (Image: DOE, funded by the U.S. taxpayer)Tesla Model S got tapped for Motor Car of the Year, a bright moment no doubt for a company beleaguered to the point where CEO Elon Musk defended his company’s financials in a post at the Tesla enthusiasts blog.

The U.S. Dept. of Energy awarded Tesla a $465 million loan funded by taxpayers. Fiscal hawk Sen. Jim DeMint (R-S.C.) criticized DOE in a late September post at his own blog, saying the amended loan included “a postponement of the $14.6 million payment due in October.”

DeMint also commented on Tesla’s Chief Financial Officer’s claims that the loan waiver was “more of a metrics-based approach…DOE obviously will not do anything to force us to pay while in the process injuring us.”

Tesla has experienced a series of problems, from the recall of 439 cars because of a concern over fire hazards to what Musk described as a “crisis recently with a supplier that had a flood in their factory.” That resulted in delays on production and shipment. Musk didn’t say where the factory was located, although he did note Tesla has a “global supply chain.”

Tesla models range in price from $49,900-97,900, out of reach of most Americans. Currently loans to such companies only benefit a small percentage of top tier income earners.

DOE has made a number of loans to companies whose officers are Democrat allies. Musk, according to The Washington Times, also got a sweetheart deal from the Obama administration for another company, Solar City:


Musk has personally given more than $100,000 to Obama's re-election campaign, including two gifts of more than $30,000 each to the Obama Victory Fund, which divides the money between the maximum allowable donations to the Democratic National Committee and the maximum to the Obama campaign. (Musk has also given generously to Republicans.)

Fiscal conservatives appreciate the need for government to fund research that is beneficial to Americans. However, there is no justification for the government to select winners and losers, mandating taxpayers function as venture capitalists.

One development for Tesla received virtually no attention from media. Tesla opened a store in a shopping mall in New York. Auto Guide said:

The brand-owned store in a White Plains, N. Y. shopping mall is angering the National Automobile Dealers Association (NADA), which points out that it’s illegal in some states, New York included, for an automaker to own dealerships. For now, Tesla seems to be flying under the radar because its products are so niche, but that could change in a flash if a major automaker decides to play copycat with the idea.

In his blog post, Musk defended Tesla, saying the company is “actually on the verge of becoming cash flow positive…”

DeMint had a different perspective. “Most taxpayers,” he wrote, “would certainly prefer to pay their taxes on a ‘metrics-based’ schedule rather than a ‘time-bound’ one. Unfortunately, while Tesla has that option, taxpayers don’t.”

Musk could have simply risked his own money. He’s rich enough and he certainly has network power. Forbes reported Musk joined The Giving Pledge, philanthropic love child of one-percenters Bill Gates and Warren Buffett. All are Obama enthusiasts. Some of the members like Buffett have benefited indirectly from taxpayer funded bailouts. Buffett pushed for the bailouts.

Bloomberg noted in a financial report that Tesla “has yet to turn a profit.”

The US Report notes that whatever happens, taxpayers are on the receiving end of Tesla's fate.

Meanwhile, Democrats continue to do what they've done forever--lobby for tax hikes.

DOE currently has an initiative to make electric vehicles more affordable.

Democrats have already succeeded in pushing through 21 tax hikes, most in the ObamaCare Tax Bill. The hikes include a tax on cripples who will pay more for wheelchairs because of a hike on medical device makers. Democrat-allied media, including alphabet TV networks, gave those hikes virtually no attention although some will impact the middle class.

(Commentary by Kay B. Day/Nov. 14, 2012)

 

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