Tesla: Not exactly innocent in the government partiality business

posted at 6:01 pm on March 18, 2014 by Dustin Siggins

Last week, New Jersey governor Chris Christie made his state the fifth in the nation to put enormous roadblocks in the path of Tesla, the electric car company whose business model is creating havoc for gas-powered and dealership-based automakers. AllahPundit called it as he rightly saw it:

But am I right in thinking that this is nothing more than pure, sweet, 200-proof special-interest cronyism at work? The sticking point, as some of you already know, is that Tesla sells directly to the public through its own stores, not through third-party dealerships. Car dealers obviously have a strong incentive to make sure that that business model doesn’t catch on. Solution: Keep Tesla off the market, especially a market like New Jersey where there’s high demand for luxury cars among well-heeled Manhattan commuters.

Condemnation from the right has been pretty thorough. Policy writer and analyst Derek Khanna says Christie’s move ignores “creative destruction,” and after the governor’s decision “57 million Americans live in states where Tesla cannot legally sell cars.” A.J. Delgado writes at National Review Online that several states are pushing regulations to make that number of Americans even larger, and “these laws effectively target only Tesla, the sole manufacturer known for direct sales.”

However, Tesla does not deserve as much sympathy as it may appear to at first glance. Per Delgado:

New Jersey is just the latest state seeking to block Tesla. Although the company has received hundreds of millions of dollars in federal and state subsidies — in the form of loans, air-pollution credits, and tax breaks for buyers — Tesla finds itself on the side of the free market when it comes to the state-by-state struggle against America’s patchwork of car-dealer protections.

On its website, Tesla notes a $7,500 federal subsidy for its vehicles, and on February 10 China’s subsidies helped shoot Tesla to a record stock price. Of course, Tesla is hardly alone in receiving assistance from friendly governments. In America, the domestic automakers saw decades of tariffs designed to protect them from Asian and European automakers, plus the 2008 bailout and subsequent harassment of Toyota by Congress. BMW, Toyota, GMAC, Ford, and Chrysler also secretly received billions in Federal Reserve loans.

And we haven’t even gotten to all of the federal subsidies to the energy sources these companies use. The Left loves to rage about federal subsidies for oil companies, but as detailed by Just Facts, gasoline’s subsidies amount to a penny a gallon. In order to reach the $7,500 per-car federal subsidy Tesla receives, the average new automobile — which as of last September got 25 miles per gallon — would have to travel nearly 19 million miles.

The production of electricity also sees enormous subsidies, but they are spread out through numerous other programs, and thus largely hidden. Those programs include large wind and solar subsidies and smaller nuclear and coal subsidies.

So, yes, criticism of the states that are banning Tesla is appropriate, especially the states that are headed by Republican governors and/or legislatures — but since Tesla has partnered with the government partiality business for years, sympathy should be a scant commodity.

 

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Momma always said, when you sleep with dogs, you get fleas.

UltimateBob on March 18, 2014 at 6:11 PM

Momma always said: when you sleep with dogs, you get fleas.

UltimateBob on March 18, 2014 at 6:12 PM

weird……

UltimateBob on March 18, 2014 at 6:12 PM

Dustin what?

While I agree there is hypocrisy, Tesla’s business model by design REMOVES the middle man, thus allowing for more consumer power and lower overall cost.

We ALL should be in favor of that.

Ca97 on March 18, 2014 at 6:14 PM

Tesla is an abomination, getting huge govt subsidies to produce cars for rich liberals. Insane. Go ahead and block its sales for that reason. Yeah, the subsidies are all part of the package to stop global warming climate change. That’s why we’re paying $7500 for every rich playboy that buys one of these cars as their second or third vehicle. Yeah, like that’s really going to help reduce CO2 emissions, even if CO2 did affect climate temperatures, which it doesn’t.

anotherJoe on March 18, 2014 at 6:18 PM

Dustin what?

While I agree there is hypocrisy, Tesla’s business model by design REMOVES the middle man, thus allowing for more consumer power and lower overall cost.

We ALL should be in favor of that.

Ca97 on March 18, 2014 at 6:14 PM

What I would be concerned about though would be a company that not only gets massive subsides from the government, but then utilizes loopholes/technicalities to get additional gains over say a similar company.

Granted, the easy way to end this is to remove subsidies from everyone…then and only truly then are you really allowing for capitalism to decide who wins/loses.

nextgen_repub on March 18, 2014 at 6:21 PM

Abomination or not, they could theoretically destroy the dealership model in this country which has prevented a new US auto manufacturer from cropping up in the last 100 years.

I don’t care whether Tesla rises or falls, but I am 100% on their side when it comes to breaking down that barrier as it leads to more choice and lower cost for the consumers.

Ca97 on March 18, 2014 at 6:22 PM

I don’t think anybody was under the illusion that Tesla was the innocent party here, what with 450,000 USD loan from the department if energy alone…don’t think Elon Musk/Tesla ever paid that money back, so it amounted pretty much to a bailout of sorts…

jimver on March 18, 2014 at 6:25 PM

450 millions that is…

jimver on March 18, 2014 at 6:26 PM

So who is going to get the Tesla Battery factory?

Texas – Arizona – New Mexico – ?

6,500 Jobs – the bragging rights for the Governor! (Rick Perry?)

jake-the-goose on March 18, 2014 at 6:26 PM

What I would be concerned about though would be a company that not only gets massive subsides from the government, but then utilizes loopholes/technicalities to get additional gains over say a similar company.

Granted, the easy way to end this is to remove subsidies from everyone…then and only truly then are you really allowing for capitalism to decide who wins/loses.

nextgen_repub on March 18, 2014 at 6:21 PM

Right, no issues with that, but then we must also remove the power given to state car dealerships. They are the reason its been 100 years since there’s been a new US auto manufacturer. If we don’t remove that barrier, and we remove subsidies (as we should) then Tesla will fall, and we will be left with poor US choices and no new competition.

Need to do both, remove subsidies and destroy the dealership model.

Ca97 on March 18, 2014 at 6:29 PM

BTW everyone – the Tesla ‘S’ Model – is the single greatest vehicle in 100 years.

IMO

jake-the-goose on March 18, 2014 at 6:40 PM

I wonder who Tesla makes political contributions to? I would prefer the government stay out of the subsidy business all together. It only serves one purpose…vote buying.

Jackson on March 18, 2014 at 6:40 PM

I would prefer the government stay out of the subsidy business all together. It only serves one purpose…vote buying.

Jackson on March 18, 2014 at 6:40 PM

+1

jake-the-goose on March 18, 2014 at 6:42 PM

…haven’t they had problems with their vehicle when car magazines have tested them…big problems?…fires…ranges way below the advertised charge, etc.?

KOOLAID2 on March 18, 2014 at 7:01 PM

KOOLAID2 on March 18, 2014 at 7:01 PM

Cars that brick and do not forget about the disappearing upgraded features without telling the owners.

astonerii on March 18, 2014 at 7:13 PM

So who is going to get the Tesla Battery factory?

Texas – Arizona – New Mexico – ?

6,500 Jobs – the bragging rights for the Governor! (Rick Perry?)

I am going with Mexico or China, about 2 years after the US battery plant opens

notalemon on March 18, 2014 at 7:34 PM

I think there’s plenty of room for the entire Tesla production run in the ditch I proposed earlier in another thread.

The ditch would be filled with windmills, solar cells, twisty light bulbs, and we could add Tesla vehicles before we top it off with ethanol and strike a match.

The net result would be a huge savings in electric rates as we eliminate all of these stupid, dysfunctional, and extremely wasteful items from our landscape and the government teat.

landlines on March 18, 2014 at 7:43 PM

So who is going to get the Tesla Battery factory?

Texas – Arizona – New Mexico – ?

6,500 Jobs – the bragging rights for the Governor! (Rick Perry?)

I am going with Mexico or China, about 2 years after the US battery plant opens

notalemon on March 18, 2014 at 7:34 PM

China has a corner on the world market for lithium, and China needs jobs…so the factory location will probably NOT be end up in the US.

landlines on March 18, 2014 at 7:47 PM

I am going with Mexico or China, about 2 years after the US battery plant opens

notalemon on March 18, 2014 at 7:34 PM

I believe Musk will keep the factory in the USA – and I suspect it will go to a GOP Governed State.

jake-the-goose on March 18, 2014 at 8:15 PM

The image is wrong, that’s not a Tesla charger.

And as a non-liberal Tesla owner, let’s not assume the politics of those who buy cars.

GruntDoc on March 18, 2014 at 9:10 PM

More Desperate Dustin….

lexhamfox on March 18, 2014 at 9:37 PM

Ca97 on March 18, 2014 at 6:14 PM

Was your momma scared by an evil car dealer?

The fact is a factory only store removes competition and the price is set. Further, getting service from a central factory as opposed to a community based dealer could be a nightmare.

Elon Musk wants total control of the profit structure. Don’t give it to him.

As for dealers preventing new product, that is beyond ludicrous.

FOWG1 on March 18, 2014 at 9:58 PM

Ca97 on March 18, 2014 at 6:14 PM

Was your momma scared by an evil car dealer?

The fact is a factory only store removes competition and the price is set. Further, getting service from a central factory as opposed to a community based dealer could be a nightmare.

Elon Musk wants total control of the profit structure. Don’t give it to him.

As for dealers preventing new product, that is beyond ludicrous.

FOWG1 on March 18, 2014 at 9:58 PM

What is wrong with consumers making those decisions? Are they not smart enough maybe, so they need central planners to make decisions for them?

slickwillie2001 on March 18, 2014 at 10:17 PM

Was your momma scared by an evil car dealer?

The fact is a factory only store removes competition and the price is set. Further, getting service from a central factory as opposed to a community based dealer could be a nightmare.

Elon Musk wants total control of the profit structure. Don’t give it to him.

As for dealers preventing new product, that is beyond ludicrous.

FOWG1 on March 18, 2014 at 9:58 PM

So what you’re saying is, we need middle men inflating prices and less choices for consumers.

Ouch. Thankfully most of the country disagrees with that opinion otherwise I would have even less faith than I already do in the American public.

Ca97 on March 19, 2014 at 12:48 PM

China has a corner on the world market for lithium, and China needs jobs…so the factory location will probably NOT be end up in the US.
landlines on March 18, 2014 at 7:47 PM

That’s assuming the next generation of batteries needs lithium. Over the years, when any one component has become too expensive a cheaper one gets substituted. Look at neoprene rubber, developed as a substitute for natural latex because the Imperial Japanese wouldn’t sell the real thing to our War Effort during World War Two. (Fancy that!)

So, I expect we’ll be seeing the advent of a Something Else Battery pretty soon now. Heck, there’s still the good old lead-acid battery; and the Edison Cell (Fe-Ni) has a very long life. And others…

ReggieA on March 19, 2014 at 10:50 PM