He gets like that sometimes, and you can see he really cares about the products he's making and the change he's trying to make in the world. So sometimes he seems deeply affected that others are so much against him, especially when they aren't playing fair.
He became a bit emotional in another interview where he said that Neil Armstrong was opposed to the idea of having SpaceX making commercial rockets (or any other private company), and that Neil Armstrong was a hero of his before, and he was very disappointed seeing Neil fight against SpaceX.
You can see at 0:40, but I'm not sure it was all of it (from that part). It was on the 60 Minutes interview.
This is a complicated topic where your simple notion of "fairness" doesn't quite apply.
In any industry where there are powerful incumbents and extremely high startup capital costs, the startups often need to be given outside assistance (i.e. government subsidy in the form of a loan) to have a chance of competing with their innovations. This is not ideal, but it is a necessary evil.
Furthermore, the incumbents had plenty of chance to innovate. What many of them did instead was to go bankrupt and ask for bailouts. Tell me: would you trust these companies with another $500 million of taxpayer money? It's like giving more stipend to a child who has proven irresponsible with money.
.. The problem is that the economic "moats" around the incumbents are largely due to state intervention and protectionist policies anyway. How much protection does Detroit get from Washington? A lot. So, you have a bizarre situation where the "solution" to market dysfunction caused by government protectionist policy is ... wait for it .... more government protectionist policy. My goodness, this sounds like your tax dollars are being spent wisely .... Not. And all this from a country that trumpets free-market idealism like the rest of the world doesn't already get it. And practice it. And do a darn sight better at it (than the North-East at least).
"What many of them did instead was to go bankrupt and ask for bailouts."
This is quite astonishing. A few large American car companies with large pension liabilities needed the subsidies (I would have let them failed and let more efficient car manufacturers take over their assets, personally). Every other large manufacturer didn't need subsidies.
"Furthermore, the incumbents had plenty of chance to innovate."
The combustible engine is more efficient than ever. We're getting many more miles per a gallon of gas than we ever had. The efficiency of the engine has done much, much, much more than electric vehicles to curb carbon emissions. Going forward, making the combustible engine and hybrids more efficient will do magnitudes more to curb carbon emissions than all-electric vehicles.
The combustible engine is more efficient than ever. We're getting many more miles per a gallon of gas than we ever had. The efficiency of the engine has done much, much, much more than electric vehicles to curb carbon emissions.
Yeah, but only because they are far more common.
Going forward, making the combustible engine and hybrids more efficient will do magnitudes more to curb carbon emissions than all-electric vehicles.
Only if you operate under the assumption that electric vehicle usage won't become more common.
> Did all car manufacturers receive a $500 million loan to build electric cars or something?
Did any other manufacturer build a car like the Tesla Roadster? Any medium to large manufacturer could have done that, noone did. So as a government I'd be wary about the true intentions of those industry players who didn't want to touch electric cars in the past decades, too.
It's okay to give them half a billion dollars in loans because others got billions? Why not be outraged at everyone involved? The industry is colossally inefficient.
Inefficient when it comes to innovating, yes. In any industry dominated by powerful incumbents and where the startup capital costs are extremely high, you do need outside intervention (I.e. a subsidy in the form of a loan) to help newcomers.
So any startup that competes in the pharmaceutical sector or biotechnology industry should be given hundreds of millions of dollars in taxpayer-funded loans?
I am not outraged at anyone, except previous commenter. But to your point, yes it is okay to give them half a billion. I don't see why government should not have supported them. And as time has shown it was a right decision, since they have paid off that loan, which I think is incredible for an only electric cars company.
Honda, Toyota, BMW, Mercedes, or smaller ones like Think, BYD, Tango, or Venturi? I could name many more. Where are their $500M+ loans to build their electric cars?
Many asked. Only few were given those loans. Why not give the money to research universities instead? Wouldn't that be a lot more fair? We could all exploit the research, instead of just a few well-connected billionaires and corporations with lots of resources.
The critical component, by far, is the battery. If you find ways to build a better battery, electric cars are a practical reality. Academia is perfect for battery research.
Building a car is an engineering project. Building a new kind of car will be a science intensive engineering project, but an engineering project nevertheless. Designing a new car is an attempt at optimizing a high dimensional design space that spans many disciplines that are interdependent. This requires fundamentally different methods and organization than those used conventional research.
is it a Governmet loan? I mean like Government taking money from the competent people who know what they are doing, and giving it to ucompetent, hey here you have money so you can compete with competent guys using their money!
I know that's the model in the US banking now. Didn't realize that it works for car manufacturers too.
> s it a Governmet loan? I mean like Government taking money from the competent people who know what they are doing, and giving it to ucompetent, hey here you have money so you can compete with competent guys using their money!
Your objection, when applied to the specifics, would seem to make Tesla "ucompetent" and folks like GM both competent and untainted by government support. This thinking has some problems.
Because we're subsidizing inefficient actors already, that makes it okay to subsidize other actors? Why subsidize any of the inefficiency at all? Tesla is certainly not curbing carbon emissions. More efficient combustible engines however are doing that, despite the lack of subsidies.
> Because we're subsidizing inefficient actors already, that makes it okay to subsidize other actors?
I didn't say that, but I would note that talking about established industries which do not benefit from government intervention in some way is a bit like the dumbed down problems we used to get in high-school physics, where we could just ignore things like friction or inertia when it was convenient.
In the real world, all our industries have a relationship with government. It's fair to say that you don't think a new entrant with a seemingly good idea should receive any subsidies like the DOE loans, but what you're really saying is that we won't level the playing field to neutralize the effect of subsidization of the existing players, and there will consequently be less competition.
> More efficient combustible engines however are doing that, despite the lack of subsidies.
This is the kind of thing I'm talking about. The companies making those engines - American, German, Japanese, Korean, whatever - are subsidized and supported by their governments. The companies making the fuel are similarly entwined with government. It's not a comparison that should cause a libertarian-minded person to immediately want to pick on Tesla specifically, which is why this line of argument strikes me as so odd.
> Tesla is certainly not curbing carbon emissions.
I really don't understand what is the problem here. Sometimes the market can't do things properly, and there, tesla motor is a great example.
A consumer market is not always great when you want to make new things, because both consumers AND current manufacturers will say they are happy with what they have, and won't see your initiative like a good thing. Consumers absolutely can't have a say in anything because they're not educated and they're financing big existing groups.
Money acts as some sort of vote, that's not very hard to understand.
> hey here you have money so you can compete with competent guys using their money!
It's a loan, it's not like tesla stole money. To top it off, it was reimbursed 9 years early. What can you be angry about ? That businesses as usual are not given loans by the government ? Imagine the chaos it would create. Government is just stimulating innovation, it works, and now it's like the soviets are rigging the game. The invisible hand is a theory, not a proven thing that always works in practice.
They're also subsidizing cheap gas to the tune of $1 billion per day in Iraq and other Middle East engagements. Economies are very complicated, there's pros and cons for every action and inaction.
Well let's look at the oil and food subsidies, and compare them with the electric cars ones. I can take a wild guess and say they are on different order of magnitudes. I wonder if I'm wrong.
Playing by the rules against incumbent manufacturers. edit: didn't Tesla repay a big federal loan a few weeks ago, many years before they had to? Good citizenship is fair.
Incumbent manufacturers have to go through dealers. Allowing Tesla to bypass dealers wouldn't be fair to other car manufacturers.
"Tesla repay a big federal loan a few weeks ago, many years before they had to?"
Why does this matter? They were given a large loan. That large loan gave them a large runway to have one profitable quarter, which allowed them to pay back the loan by issuing shares and bonds. Another car manufacturer couldn't do the same if you gave them $500M loans? Why should Tesla get it and not others?
Why should incumbent manufacturers have to go through dealers? Why can't they sell direct to the end customers via the internet?
Do the incantations "disintermediate all supply chains" and "disrupt all mature industries" suddenly lose all their magical HN mojo when confronted with the Kryptonite of the car industry?
This is a different argument altogether. The original argument was about Tesla playing on an unfair playing field, which is demonstrably false. Other car manufacturers have to go through the same dealer network. Why should Tesla be allowed to sell directly when other car manufacturers can't?
Who forces car manufacturers to go through a dealer network? Or rather, who forbids them from selling direct to the public? Doesn't that constitute unfair restraint on trade?
I'm serious here. (Non-American speaking.) Is there some law that mandates that cars can only/must be sold through dealers?
Maybe it actually protected consumers three decades ago, but now, consumers have access to more than enough information to make those kinds of decisions for themselves.
You don't need to be fair to incumbent manufacturers. They're the incumbents, they already have a bajillion advantages.
Aren't the incumbent manufacturers the ones who lobbied for those dealership laws in the first place, to raise the bar for entry into the market place? (And if not, haven't they had year with piles of cash beyond our wildest dreams to buy off legislators and get the law changed?)
I am perfectly happy to have the federal government give out loans to startups to disrupt stagnent industries. Can you imagine how our ISP industry would be doing if, instead of passing laws which make it impossible to disrupt, the US government was occasionally throwing half a billion at people who wanted to try? Granted, Elon Musk wasn't exactly at the 'rags' phase of a rags-to-riches story when he got his loan...
No, if you study the automotive industry, you'll see that those car manufacturers have been trying to get around those dealers by building their own dealerships (which are quickly shut) or selling their cars online (which again are prevented). They're not lobbying for dealerships in countries where you can sell cars directly to the consumer. Take Brazil or Germany for instance.
For my own benefit, do you have more information about the circumstances of Tesla's loan? Did they get a special deal, or were they just successful applicants to an open-to-all opportunity?
Tesla qualified. Their application was reviewed by a board of People Who Know Things.
I know this because my aunt, a respected physicist, sat on such a board. They're not throwing shit at the wall to see if it sticks; they know what they're doing, and they're not picking winners and losers, they're playing the same game every investor plays: trying to decide who is going to win or lose before it happens. Tesla got the loan because they won it. Which is fair to the same degree as any other investment process. Unless, that is, you have some additional knowledge of corruption in the review process.
Solyndra should have proven that the government cannot "pick winners and losers" even if it wants to -- as long as the government isn't the primary player in the market, which is unfair, but also isn't what happened with Tesla.
Or GM, for that matter.
As for dealerships, the reason Tesla doesn't have to go through them is because they don't have any preexisting agreements with the dealerships, in the same way that, for example, someone who agreed to take out a student loan has to pay that back, but someone who didn't go to college, or went to a cheaper school, doesn't have to. There's nothing unfair about that either. Sure, dealerships are a pain: let's drive them all out of business, please. I'll be first on board.
"they know what they're doing, and they're not picking winners and losers, they're playing the same game every investor plays: trying to decide who is going to win or lose before it happens."
The government should be in the venture capitalist business funding companies based on the recommendations of the board of People Who Know Things, now?
"As for dealerships, the reason Tesla doesn't have to go through them is because they don't have any preexisting agreements with the dealerships."
Other smaller car manufacturers are having to go through dealerships, even with zero pre-existing relationships. Why should Tesla, which has a market cap that far exceeds those aforementioned manufacturers, get special rules?
> Other smaller car manufacturers are having to go through dealerships, even with zero pre-existing relationships. Why should Tesla, which has a market cap that far exceeds those aforementioned manufacturers, get special rules?
They shouldn't. Remove dealership requirements for all manufacturers. I think that's pretty clearly what Tesla is arguing for.
> The government should be in the venture capitalist business funding companies based on the recommendations of the board of People Who Know Things, now?
Sure. Why not? I want the government to stimulate innovations in places that need it.
Well, yeah. Who else? It's not dissimilar to how academic research funding works. Proposals are submitted, evaluated, and sometimes awarded funds.
As far as curbing carbon emissions goes, there are a lot of irons in that fire, both public and private. No reason to place all your eggs in one basket. There are a lot of reasons to publicly support new innovations in EVs. It's a very high-profile field, and Tesla is doing a fantastic job of showing that EVs can be fun, pleasant cars. Putting the money into academic research isn't going to generate nearly as much public interest.
>Other smaller car manufacturers are having to go through dealerships, even with zero pre-existing relationships. Why should Tesla, which has a market cap that far exceeds those aforementioned manufacturers, get special rules?
I don't believe you. Show me some evidence that they have to, and that they're not merely choosing to.
>[It shall be a violation...] to offer to sell or to sell any new motor vehicle to any person located in the commonwealth, except a distributor, at a lower actual price therefor than the actual price offered and charged contemporaneously to a motor vehicle dealer located in the commonwealth for the same model vehicle similarly equipped or to utilize any device which results in such lesser actual price unless the same is available on equal terms to all dealers located in the commonwealth; but this paragraph shall not apply to sales by a manufacturer or distributor to any unit of the federal government or any agency thereof or to the commonwealth or any of its political subdivisions.
As written, this clearly applies if and only if Tesla already sells cars to dealers, and furthermore similarly to other independent car manufacturers, electric and otherwise.
Is it a bad law? Yes. Does it hurt the incumbents? Yes. Is it biased in Tesla's favor? No. Is it giving Tesla special treatment? No.
To rephrase this:
Did all students get A on the exam? Did all even try to learn to get good grade? No. And why should it matter. Ones who did put some effort into learning got the loan. Others didn't. OMG HOW IS THAT FAIR?
Yup, unfair indeed, lol.
There shouldn't even have been a loan in the first place. The government has no right to dole out taxpayer money in the form of loans to private companies.
How exactly did Tesla earn an "A" up to that point? Every small electric car manufacturer was losing money left and right. Two smaller startups got the loan (Tesla and Fisker) to survive, while the others didn't (Bright Automotive, etc.). The ones that didn't get the loans went out of business. The one that got the other $500 million loan went out of business (Fisker). Only Tesla survived by having one tiny profitable quarter (which was a low single digit profitable quarter where they sold 3000 cars to rich people).
> How exactly did Tesla earn an "A" up to that point?
Business plan, business model, customer research, advances already made, further along, ... There are dozens of possible reasons to loan $500M to Tesla, but not to another company.
There are dozens of possible reasons why you would loan $1000 to one friend, but not to another. Someone else wouldn't know those reasons, but if the friend complained about you being unfair, you would be quite miffed if someone went on the internet complaining how unfair you were, based on treating two people differently, without considering that maybe these people actually are different.
These companies may be alike in trying to sell an electric car. That does not make them comparable for the purposes of giving them a loan.
So the government is now a venture capitalist or investment bank and should be encouraged to pick winners and losers now?
It's quite funny that these Tesla Roadsters are being bought by rich Americans, and being subsidized by average Americans, and yet there seems to be no outrage from those purportedly upset about inequality. The average American isn't benefiting by enriching billionaires and millionaires with their $100,000 roadsters.
So because the company cannot take $500m and instantly start turning out third generation EVs that have a price point that the average American can afford, we should just refuse to invest any money in driving toward that goal and just stay with the status quo of oil-dependant cars?
The end goal of the loan was not to make Elon richer or enable Tesla to sell a few thousand cars to "billionaires and millionaires". It was to support a company that had demonstrated a plan that looked reasonably viable for building up the EV tech to the point that it can become a mainstream replacement for ICEs. The incumbents have not shown as much interest or drive, and the initial attempts by them at delivering EVs have not seen the same level of adoption and excitement from the public. I believe that this lack is due to the less efficient manner they are going about it: trying to retrofit EV technology into the ICE world.
I am certainly not a millionaire. I am above the salary level of the average American. That meant that it was possible for me to save up and purchase a Model S. Based on my experience of owning it and my research of the company, I believe that this is the future and I believe that $500m loan was not simply a capital venture or investment but rather that it was very much a benefit to the average American because it will enable a third generation of EVs to enter the mainstream.
I believe the established companies see that plausible future also and are fighting as hard as they can with lobbying and lawsuits to prevent being overshadowed by it.
We've come a long way since the 1930s, haven't we? Yes, the government can do these things, and -gasp- it works, on a small scale, under certain conditions (economic depression).
The "$500m subsidy" to Tesla costs taxpayers zero after being repaid -- but represents a loan from the median taxpayer of about, oh, I dunno, seventy-five cents.
I should perhaps note that that isn't a subsidy to Tesla: it applies to every electric car manufacturer. It's not relevant to the question, which is, "did Tesla succeed "unfairly" w.r.t. other makers?". It's also a red herring for your previous argument about inequality: "Both the Nissan Leaf electric vehicle and the Chevrolet Volt plug-in hybrid, launched in December 2010, are eligible for the maximum $7,500 tax credit." -- these are cheap vehicles.
But yes, now that you've successfully moved the goalpost, I might have to revise my estimate of seventy-five cents.
Does it actually matter? Here the one thing, there the other.
You're complaining about "government picking winners and losers with taxpayer money". The loan isn't a waste of taxpayer money. The subsidy isn't picking winners and losers. Taken together, these two things do not provide weight to your claim: Tesla is not a messiah of the government on the wings of the taxpayers. Or, at least, you have failed to demonstrate that.
Life's not fair. Better you get used to it and take every advantage you can get.
It's not like it was free money anyway. It still was a loan and had to be paid back. You're acting like the US government would have gifted that money to Tesla.
How do you explain the $7,500 subsidy for each Tesla sold?
Also, the government would have gifted them the money regardless of their ability to pay it back. Fisker couldn't pay back theirs, as did many other energy companies that went bankrupt. No one was arrested and no personal assets were taken.
The same way I explain the $7,500 subsidy for each ANY all electric car sold; as the government trying to promote alternatives to ICE because (in theory) it's good for the planet and economy.
How is it fair that non-internal combustion transportation has to compete with ICE based companies whose fuel source is heavily subsidized by the U.S. government through military intervention in the Middle East? How much more would oil cost if the U.S. military wasn't propping up the Saudi monarchy and constantly patrolling the supply lines?
looking at fairness in retrospect. Musk justified the loan. He built the damn thing, an (possibly) eco friendly, not dependent on fossil fuel car that people love.
back in my country we have our own electric car company, which have been able to do the thing, but they havent been able to get people support.
I'm not saying that Musk didn't build a hell of a car. He did. What I'm saying is that government shouldn't be using my tax dollars to give out loans to private companies on the off chance that they might be successful and be able to repay the loan. Plenty haven't been.
Remember the word 'loan' designates a debt instrument. It needs to be paid back. If you don't have the capital to secure the loan (and pay it back), no -- you shouldn't get the money.
Fisker and Solyndra and several others couldn't pay back their loans. The government didn't arrest any of them and didn't take any of their personal assets. The debt was simply discharged.
And GM got a $49 billion TARP bailout. Not specifically for making alt-fuel vehicles; just because they were a failure. But we should all be really incensed about those tesla guys getting a loan. Which they repaid already. Because that's not fair.
I am upset that the government is wasting my money like this. I don't think Tesla is being unfair by applying for and accepting the loan though. Tesla didn't tell Bush to tell the DOE to loan $25B to green automakers. They're merely taking advantage of the opportunities that are available.
Every auto company in the world has received substantial assistance from their national government. In the U.S., it's ludicrous to single out Tesla for special attention less than 5 years after both GM and Chrysler received bankruptcy bridge financing from the federal government.
That's like asking how is that poor, first generation Harvard student playing fair? Did all Harvard students get a scholarship? No, but a lot of the other kids had parents that went there so they got a leg up in the admission process and their parents are rich enough to pay for it.
I find it difficult blaming Tesla for doing what it can to catch up in an industry where the established players have a huge advantage.
I was there today. The emotion was shared and felt by everyone in the room. I'm not a lawyer, but it seems like this could ultimately become a serious free speech issue.
Edit: I ask a very dry question at the 45 minute mark. I'm pretty easy to spot because I'm wearing Google Glass.
Not to sound mean (and people usually say that when they know that they could come out as mean), but for some reason that reminded me of people who walks around with bluetooth headset and talking to themselves, surrounded by a lot of people.
Its just me though.
Otherwise your question was interesting and unpredictable, almost all the other questions were something I would have thought about asking. You know the usual stuff.
Thanks, agreed, crappy title. The insight he provides into the auto industry in those few minutes is awesome. It explains why I've consistently had a crap experience buying cars over the years (they don't make any money selling them) and why car service costs so much in the USA.
It's a tough fight too. I mean, this association has been around for almost 100 years. A lot of bills greasing politicians hands too ('Murica!!). Tesla have their work cut out for them in disrupting this megalithic entity. Best of luck; sincerely mean that. These guys are effectively patent trolls, and will do anything to hawk their inferior wares.
My standing question for that is wouldn't a launch loop have to be located over the ocean, at least say 10 miles out? And then wouldn't it take much longer 25 minutes to take a boat trip out, take the trip and then take a boat trip back in at your destination?
Edit: On second thought if you're spending launch loop kind of money maybe building a 10 mile bridge out to the station isn't that big of a cost?
He's said that any loss of power or stability would result in a safe failure mode. I can't see how that fits in with a thousand kilometre long looping supersonic cable in the sky.
The point Elon is raising is important. Dealerships (or middlemen) that we can exist without are lowering our $ purchase power. Sure, it's a small amount. But think about it in the long run, and at larger scales.
It just happens that Elon faced this problem now. That's why he's speaking, and it's good that's he's willing to fight them.
There is lot of sh*t going around. Like government not doing their job. It's time people are aware of their rights and speak out. It's these tiny wins that are going to make the change in the future.
Around minute 25 there appears to be a very awkward waiting-for-the-Steve-Jobs-applause moment after Elon explains the updated navigation system. A few more announcements are made without applause and then finally, just before the 31 minute mark, applause is finally handed out when the launch date of the Model X is announced. I hope Elon didn't feel disappointed with himself or the audience. Applause is cheap. The questions that followed demonstrated audience buy-in more than any amount of applause could ever achieve.
I remember hearing a quote somewhere about Elon Musk. To paraphrase: Make sure you don't have any money in your pockets when you meet him, because by the end of the meeting you will have given it to him.
But seriously, I think 'being sold' has somewhat of a negative connotation - it implies that Elon is putting on an act to try and convince you buy something you otherwise might not. I think what Elon in fact does is just present a vision that he very much believes in and can make happen. I think that is why is is so effective - he is not trying to 'sell'. Hes just talking about what he believes in.
Disagree. This guy seems pretty legit and humble. Calculating and shrewd? Sure, I give him that: a vision like Tesla and Space X would require such characteristics. That said, I take him on face value and love how his vision comes from such a genuine place of logic and reason (as opposed to the Jobsian hoopla bullcrap). A singular figure.
I had no idea there was actually a written law that prevented auto manufacturers to sell directly to consumers. What is this law supposed to achieve exactly?
Officially, to make sure customers have a dealership close by where they can have their cars properly serviced without delays or long trips. In practice, to protect dealers with fat margins and terrible commercial practices.
From what I remember from a few years ago (quotation needed or the loan part may have changed), they make a few hundred dollars on new cars, bigger margins on second hand cars and about 40-50% of their income from car loans.
dealers have fat margins in the US? I'd be suprised. around here they are capped by the manufacturers and raised only after achieving goals that are impossible for newcommers to meet. the money is made on service, without that you'd basically sink cash into a very expensive gallery. setting up a dealership is tough, very expensive and very risky.
Some of the comments here amaze me. Many (most?) countries have business development banks, that give out loans to entrepreneurs... It's confusing why a loan given to a start-up car company is such a scandal.
Those who understand capitalism know that entrepreneurship is the main driving force behind economic growth, as well as innovation, job creation, and most other positives that capitalism brings...
He does that. Musk almost lost it in his 60 minutes interview when asked why Neil Armstrong (a hero of his) was actively against what both he and SpaceX stood for.
Personally, if I were told on national TV that my personal hero hated what I was doing, I'd be pretty negatively affected as well.
He became a bit emotional in another interview where he said that Neil Armstrong was opposed to the idea of having SpaceX making commercial rockets (or any other private company), and that Neil Armstrong was a hero of his before, and he was very disappointed seeing Neil fight against SpaceX.
You can see at 0:40, but I'm not sure it was all of it (from that part). It was on the 60 Minutes interview.
http://www.space.com/14936-spacex-ceo-elon-musk-60-minutes-i...