NYT scribe: No bailout for Tesla-buying 'centimillionaires*'

A New York Times columnist has launched an attack on the idea of electrocar poster-child firm Tesla Motors receiving "bailout" federal loans, saying that the company's products are toys for the super-rich. Tesla says that the only reason it wants the government money is to finance the production of more affordable cars; the existing $100k Roadster supercar is expected to start turning a profit shortly without further investment.

Writing in his regular Digital Domain slot at the Gray Lady last Friday, history PhD and business prof Randy Stross had some harsh comments to make.

"Why should taxpayers fork over the capital that Tesla needs? The Roadster is not much more than a functioning concept car," he wrote.

The historian, who has written many books on Silicon Valley and inventors, believes that companies like Tesla rely on Moore's Law-style rapid improvements to their technology. But he has bad news for Tesla.

"Batteries are based on chemistry and have nothing to do with Moore’s Law," says the San Jose State University bizprof.

PayPal hecamillionaire Elon Musk, Tesla's main financial backer and helmsman, has only ever suggested a "weak Moore's Law" in terms of batteries. But Stross - quite the whiz with numbers - points out that Musk's hoped-for eight per cent annual improvement in Li-ion battery performance would take nine years to halve the price. Apparently Stross knows something Musk doesn't, because he states categorically that this will be "too late" for Tesla.

The biz svengali then goes on to speak approvingly of mainstream motor firms' plans to build plug-in hybrids, able to run on batteries for a short daily commute but with conventional engines included for greater range when required. (Tesla does, in fact, plan to offer "range-extended" motor-plus-battery options in its mass-market design, if it can get the finance to build it.)

Stross seems to approve of charging one's car up at the mains in some cases, however.

"For households that install their own power-generating solar panels, electric cars can rightfully claim to attain truly zero emissions today," he writes.

Let's have a think about that. One of Stross' favoured cars is the Mini E, which boasts a 35 kilowatt-hour (kWh) battery able to propel it 150 miles, according to makers BMW. A 40-mile commute should thus be a matter of just nine kWh. A "typical" 20 square metres of home solar panels might generate as much as four or five kWh each day, so you'd only need to leave your car hooked up for two days on average to achieve a single "truly zero-emission" commute.

If you had room for 40 square metres of panels (that's a very big house) it would only take one day, though you'd still need to go to work at night, or store the power at home in some (very efficient) way, or get into smart-grid 'leccy dealing or something.

Anyway. Tesla says that in fact it does not require any bailout for the Roadster supercar. Mr Musk says the firm will need no further money in order to become "cash flow positive" based on existing Roadster and powertrain sales.

What the company says it would like is money under the US Department of Energy's Advanced Technology Vehicle Manufacturing (ATVM) scheme, set up in September to encourage fuel-efficient cars. Tesla says it applied for ATVM loans last month, before the latest money-market convulsions, in order to set up a factory to build the planned Model S - which ordinary Americans might be able to afford, as opposed to Stross' Roadster-buying "billionaires and centimillionaires"*.

However, there are now plans by some in Washington to shift the ATVM tech-encouragement funds into a bailout plan for America's big-iron motor mammoth companies.

"Tesla Motors is applying for the Department of Energy loans in the truest spirit and intent of the program," says Tesla veep Diarmuid O'Connell. "The company does not endorse the diversion of the ATVM resources for a bailout of any kind."

But Stross of the NYT is having none of it. Tesla shouldn't get any "bailout", he says.

"Can you conceive any way that federal dollars could be put at greater risk — and for no equity in return, keep in mind — to benefit fewer people?" he asks.

Well, can we? ®

*Whoops. You probably mean hecamillionaire, Mr Stross. A centimillionaire would, of course, be unable to afford a $100k Roadster.