Well, cash flow positive until they decide to develop, test, and manufacture another model, which will again put them in the red. Building cars is a very expensive proposition.
I think the DOE loan has probably hurt Tesla's stock price more than it's helped -- the rumors about late repayment, etc. have probably depressed it from 33-35 down to 29. If Tesla hadn't taken $1 from DOE, it would be able to attack Fisker and Chevrolet and others for being Government Motors, and wouldn't have gotten name-checked in Romney's debate answer tonight.
The only money MuskCo's should be taking from the government is payment for services (like flying cargo to the ISS, Moon, Mars, selling cars or solar power to them, etc.), not using the government as VC. The government is a horrible VC or lender, and the MuskCo's could do a lot better.
96% on this program so far is possible, but there are numerous other examples of the USG investing in businesses which fail, and even worse records for state/local governments (stadiums and convention centers being the classic example)
There are numerous intangible benefits to these programs beyond the success rate of the businesses. Jobs get created, technology is invented or improved, and supply chains and support networks are created or are made more efficient. While VC's might only care about the balance sheet, the government isn't in this to make money, they are in this to make our lives better.
What is the proof for this statement? I'm not asking what are the theoretical underpinnings of this worldview; what is the evidence which compels this conclusion?
That's difficult to say, because government investments mostly go into infrastructure and enablement policies, not ventures. But let's give it a shot.
USA: Green energy investments, of which some companies have turned out to be outright fraudulent.
China: Massive infrastructure and housing overspending and bubble, with much shoddy construction. Housing and construction companies everywhere benefiting from the money only contributing to a high-probability disaster ending.
Most Olympics-hosting nations, depending on what you perceive to be an acceptable measure of return.
If I recall correctly, the DOE loan is very low interest rate, repayment is based on metric milestones, and at the time financing via traditional capital markets was fairly difficult for almost anyone.
Yeah, but the government itself is borrowing money at absurdly low interest rates right now. If you agree with the notion that government intervention to get an edge in strategic industries can be a good idea, it looks like a good loan at whatever rate they got (assuming it's higher than a 1/8 of a percent, the gov't turns a profit, too).
If you agree with the notion that government intervention to get an edge in strategic industries can be a good idea, it looks like a good loan at whatever rate they got (assuming it's higher than a 1/8 of a percent, the gov't turns a profit, too).
I agree with this notion. Why not use whatever resources available to gain a competitive edge?
Gimme a break. Every government with an auto industry to speak of has supported their auto indusstry at one time or another. And almost every government would love to have a company like tesla in exchange for a few loans that are about to be repaid.