June 3, 2013

Tesla Is No Success Story

Christopher Koopman

Senior Affiliated Scholar
Summary

Tesla Motors, the California-based electric car start-up, has been the subject of a great deal of hype. With the recent news that it repaid its $465 million low-interest loan from the Department of Energy, it's nowbeing heralded as a success story worthy of redeeming the failures of a green-energy subsidy program that has included the likes of Solyndra, Abound, Ener1, and Fisker Automotive. Since then, Tesla's stock value has more than doubled and the company is currently valued at around $12 billion.

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Tesla Motors, the California-based electric car start-up, has been the subject of a great deal of hype. With the recent news that it repaid its $465 million low-interest loan from the Department of Energy, it's now being heralded as a success story worthy of redeeming the failures of a green-energy subsidy program that has included the likes of Solyndra, Abound, Ener1, and Fisker Automotive. Since then, Tesla's stock value has more than doubled and the company is currently valued at around $12 billion.

Tesla's success is ultimately a case study in the perils of government-granted privilege, its financial success demonstrating a reliance on political favoritism more than an ability to create value for customers. Tesla Motors would not have been created were it not for the generosity of politicians – if generosity is the right term for spending taxpayers' money.

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."

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