Recently speaking at the Wall Street Journal’s ECO:nomics conference in Santa Barbara, Tesla CEO, Elon Musk, in his typically candid fashion, gave some interesting insight into his company’s Department of Energy Loans and how it was indeed Daimler that saved Tesla, not the government.
As a quick side note, if you haven’t seen Chris Paine’s excellent Who Killed the Electric Car?, or his follow up Revenge of the Electric Car, do so now. Both films are a great look into the modern history of the electric car and help give insight into the birth of the current generation of EVs on, or coming to, the market.
In Revenge of the Electric Car, a plucky Elon Musk is struggling to keep his company afloat. The young Tesla CEO reveals that in the startup’s early days, he had to wire $3 million of his personal fortune so that the company could pay its employees.
Now, in the wake of a $465 million DOE low-interest loan guarantees Tesla received under the government’s Advanced Technology Vehicles Manufacturing program, Musk believes it was Daimer, and not the DOE, that saved Tesla from bankruptcy.
“We were saved by Daimler,” Musk said, before adding that Daimler’s $50 million, 9 percent ownership of Tesla was more than enough for the company to launch a successful public offering without help from the DOE.
Some may see Musk’s statements as unappreciative – biting the hand that has fed, and is feeding, the company now. And while Musk could have easily been less cavalier about the loans from the DOE (he rarely is), he does have a point. Daimler’s investment was crucial to Tesla receiving the DOE loan guarantees in the first place – without them they probably wouldn’t have received the much-needed cash influx. But the loans handed out by the DOE are important to Tesla’s long-term success, and have allowed the California startup to do a lot more.
Of course, $465 million in tax-payer money isn’t something to just ignore. Musk seems to acknowledge this in his own way, adding, “The DOE was a helpful catalyst,” but that it wasn’t crucial to the company’s survival or success, he says.
Never one to pass up the chance to create some sort of buzz or controversy, the Wall Street Journal reports that the Tesla CEO went on to add that he “generally doesn’t believe government subsidies are good, but in some cases they do help.” Musk’s sentiment seems to stem from criticisms leveled at government subsidies, and believes these incentives artificially pick winners and losers – believing that the best company should win based on market performance.
According to Musk, the best way for society to help reduce problems concerning climate change is to impose a tax on carbon dioxide emissions rather than “indirect” government subsides, like those given for electric cars. Stating, “The ideal would be to tax C02.”
Of course, Musk’s statements, although generally provocative and overly boisterous, don’t generally cross into the realm of confusing. While the enigmatic CEO is certainly welcome to his convictions, the fact that Tesla is looking to be on the up and up has as much to do with those very loans he is opposed to, which by the way seem to operate more in theory than in principle.
Still, we can’t say for sure what Musk is thinking. Maybe he is distancing the company ahead of the 2012 Presidential campaign from the DOE, and all the political mudslinging surrounding the ATVM loan program. Or maybe he just enjoys causing a stir. Either way, Tesla is currently in a solid state, and Musk will no doubt be looking forward to continued success — and maybe another opportunity to fan the flames down the road.
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