The department of energy routinely gives low-interest loans to interesting energy startups because there's a compelling national interest in renewable energy.
So, yeah, we're on the hook for 500m. But we just spent a trillion in Iraq. And when we hit peak oil and hit a point of total supply inelasticity for energy, we're really gonna be up a creek.
There are literally thousands of companies that get these loans. I invested in one called Beacon Power, they build electrical grid stabilizers based on flywheels -- suck in excess power during supply peaks, then spit it back out if everyone turns on their AC units at once. Great idea. Helps the whole economy if they succeed, not just them. So the dept of energy took the long view and threw them a few million dollars as a loan.
All in all, this stuff adds up to way less than 1% of domestic federal spending -- which itself is less than 1/6 of the total federal budget. If a few of them pan out and we reduce our dependence on foreign oil, then it's a win.
If they choose to locate the factory in high-cost California, I have to wonder what's going on. It makes no business sense unless CA has some outstanding tax benefits for green industries.
If you're a small company (500 people for Tesla, apparently), building a never-been-built product and probably encountering lots of kinks along the way, it's probably worth having the factory be local. The high-priced engineers who design the thing can just blast over to the factory while they're figuring out production issues.
Just speculating, of course. But I'm assuming they somewhat know what they're doing, given that they actually built the thing and it actually works. Gotta give them some benefit of the doubt for that.
Another speculative data point, a vehicle like this, the engineering is a much bigger % of the final cost than your standard "build what we built last year" car.. that has to come into the decision as well.
Now Tesla insiders are leveraging that taxpayer loan to IPO.
Is this free enterprise or just corruption?