The Hypothetical Automaker Bailout Gets Another Supplicant

The big three automakers are clamoring for a piece of the hypothetical $25 billion auto-bailout fund. And newcomer Tesla wants a piece of that too, apparently. The startup auto-maker has requested $400 million in low or no-interest loans to fund two upcoming projects (likely their new $70k electric sedan and a low priced third car).

Tesla has raised nearly $200 million in capital since 2004, including a recent $40 million convertible debt financing. Prior to the debt round, Tesla unsuccessfully tried to raise $100 million in new capital.

But forget the private capital markets. You can’t beat cheap loans from the government. Of course, the entire bailout is far from certain at this point, so don’t count those chickens yet.

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Comments

[bosun.j:]

Perhaps China will buy Tesla too:

Chinese carmakers SAIC and Dongfeng have plans to acquire GM and Chrysler, China’s 21st Century Business Herald reports today.

thetruthaboutcars..../

That will really get the rah rah rah sis boom bah we're number one nationalist types excited!!

Been telling Americans they need to learn Chinese for many years.

2008 Nov 19 01:34 PM

[Mister Jimmy:]

You're confused, Michael. This is not a "hypothetical $25 billion auto-bailout fund". These funds were approved for the auto industry by Congress long before the current crisis. The loan application process was only maded availabe recently. The auto makers are petitioning for separate loan guarantees that are not restriced to alternative propulsion development.

Sorry, but you are yet another Seeking Alpha contributor with only a partial understanding of the facts. Must be a requirement of theirs.

2008 Nov 19 01:54 PM

[Bababooie:]

get your ducks in a row ... Tesla wants part of the 25B tech money... not the new 25B operating funds

2008 Nov 19 01:56 PM

[Bababooie:]

Mr. Jim. . .
Ya beat me to the punch . . . LOL

2008 Nov 19 01:57 PM

[zalo:]

The government should not bailout the automakers. The BIG mistake in the US is thinking that they need to keep alive inefficient companies running for the sake of the employments. By doing this, they keep excess capacity running in whole industries and this makes it worse for the sector. For example, by allowing airlines permanently going into chapter 11 instead of liquidating them, excess capacity remains in the industry which endangers the profitability of the whole industry. By allowing the offer side to shrink, the remaining more efficient companies could actually raise prices and take pressure out on themselves. Solvent more powerful companies would appear instead, which in the long term is much better for employment conditions. The same is for automakers. Let them go bankrupt and shrink down. Automakers carry too heavy health and pension burdens combined with inefficient strategies and excess capacity. Bankrupcies would reduce this burdens and clean up capacity in the industry, allowing the surviving part, though smaller, run smoother. So, save the employees with the $25 billion through job insurance, but do not save the companies.

2008 Nov 20 01:46 AM

[33Nick:]

Hum, wonder in what shape GM would be now if Carlos Ghosn would have had the 25% stake in the company he was after last year when GM screamed bloody murder.

Also, why not let Tesla and AFS Trinity, as well as more innovative and active startup have access to that $25 billion bundle? Surely, they have been quicker bringing out concrete systems out the door, all things considered.

Come to think of it, why not have what makes the back bone of our economy have access to low rate loans, small businesses?

Oh what a tangled web they weaved...

2008 Nov 20 03:18 PM