CA built Tesla Model S is 2nd best selling luxury car in the nation.

[Dinner]

Then let a bank lend them the money.

The problem is the bank will demand an absorbent rate yet the competition from other countries will get government backing so you either play the same game, enact protectionism, or just admit that you're going to have a worse economy than those who do. I'm unwilling to do the last but am open to the other two.

[Dinner]

The government is not likely to give loans to businesses that will probably succeed; in fact, it is most inclined to do the opposite.

First of all the government just co-signs loans which the companies get from private lenders. Second of all the US Department of Energy's program has an exceptionally low default rate though part of that is that 75% of the loans go to larger established companies to help them modernize their equipment and only 25% of them go to riskier start ups. Clearly you're wrong when you claim it is a "fact" that the government is unlikely to give loans to businesses which will succeed.

http://www.thedailybeast.com/articles/2013/04/02/solyndra-2-0.html

Says the program is a co-sign not a government loan:

http://en.wikipedia.org/wiki/Solyndra

The report on the independent review of the program done last year: http://www.whitehouse.gov/sites/defa..._portfolio.pdf
L.A. Times article on the Independent review: http://articles.latimes.com/2012/feb...loans-20120211

Also Solyndra's biggest problem was the exact same one every manufacturer outside of China has, namely, that the Chinese government was giving it's solar panel makers absolutely massive subsidies often exceeding 50% of the panels retail price. That's why most makers in non-protected markets went out of business. That's also why we either need more protectionism (no, Obama's 3% tariff fig leaf isn't enough when the subsidy is 50%) or we need to match their subsidies.

[Dinner]

BTW the loan program was funded via TARP by Bush but that was just a reauthorization of a loan program going back all the way to the 1980's. Pretty much all the Republicans who now grandstand on the program voted for it.

The loan program, which was separate from the U.S. auto bailouts to GM and Chrysler under the Troubled Asset Relief Program (TARP), was designed to get fuel-efficient vehicles to consumers faster.

Read more: http://business.time.com/2013/05/23/...#ixzz2U9wDSy9F

[Wezil]

The problem is the bank will demand an absorbent rate yet the competition from other countries will get government backing so you either play the same game, enact protectionism, or just admit that you're going to have a worse economy than those who do. I'm unwilling to do the last but am open to the other two.

Government making business decisions for political reasons is a terrible idea.

[Dinner]

I see a need to push towards a non-greenhouse gas economy or at least a pressing need to decrease greenhouse gas emissions. If having the government co-sign loans helps to achieve that then I'm for it especially given that it has less than a 10% default rate. It's a very low cost way to goose advancement in that area.

[Wezil]

You should have government back loans in all industries. Just think about how rocking your economy would be then.

[Dinner]

Encouraging emerging industries which help a global goal, like reducing green house gas emissions, is one thing but not only is it financially impossible to help every industry but that isn't even desirable. It's one thing to nudge and an entirely different one to try to do everything. Even government's powers are limited.

On a different note, the Texas state legislature has proved their talk about small government is all BS while NC is in the process of doing the same.

Tesla's fight with America's car dealers

Tesla Motors doesn't want to sell its cars the way every other car company does, and that's making a lot of traditional automobile dealers mad. And those dealers are fighting back.

Both sides insist they're only trying to protect car buyers.
What Tesla (TSLA) and its chief executive Elon Musk want to do is to sell its Model S electric sedan directly to consumers rather than using franchised car dealers. General Motors (GM, Fortune 500), Ford (F, Fortune 500), Toyota (TM) and others don't sell cars to customers. They sell cars to independently owned and operated dealers or distributors who, in turn, sell them to the public, usually after some negotiation over the final price. It's a system that dates back to the Model T.
By contrast, Tesla's showrooms, of which there are already 37 around the country, are owned and operated by Tesla Motors. Most of the showrooms are in shopping malls with only enough cars kept in inventory for display and for test drives. Also, there's no haggling. Every Tesla car sells at full sticker price. Service on the cars is performed at separate garages, also owned by Tesla.
Bill Wolters, president of the Texas Automobile Dealers Association, thinks that's a horrible idea.
"If Elon Musk wants to have a showroom in a mall, that's fine," Wolters said, "but he can't own it."
Auto sales are mostly regulated at the state level. In some states, Tesla has had little or no problem opening its stores. In other places, auto dealers and their allies in state government are resisting Tesla's plans, fearing it could ultimately undermine the system of franchised auto dealers as other automakers will try this, too.
Today, Tesla can't sell cars in Texas. Tesla has showrooms there, but employees can only show off and explain the car. They can't give test drives or take orders. They can't mention the price at all, even if customers ask.
Gallery - 11 must-have options for demanding drivers
Wolters is helping lead the fight in Texas to keep it that way. He's speaking out against Tesla's proposal to create an exception to current laws forbidding automaker-owned dealerships.
The current law doesn't stop anyone in Texas from ordering a Tesla Model S online if they want to. Tesla just can't deliver it to the customer. The buyer has to arrange for delivery through a third-party shipping company. Online ordering is currently legal in all 50 states.
In North Carolina, though, dealers are pushing to pass a law that would make it illegal for Tesla to sell cars online there. A representative for the North Carolina auto dealers group did not return a call seeking comment on that legislation.


The traditional dealer franchise system is best for car buyers, Wolters insists, because it preserves competition between dealerships selling the same products. It would be difficult for Tesla to maintain its one-price system with competing dealers selling Model S cars.

Jack Gillis, with the Consumer Federation of America, disagrees. Customers actually don't like haggling over prices, as evidenced by the fact that we haggle over almost nothing else except cars. A one-price system, like Tesla's, is fairer, Gillis said, because it's more transparent and doesn't put less belligerent shoppers at a disadvantage. If the price is too high, customers just won't buy the product.
But Wolters also cites safety concerns in Tesla owning service centers. If Tesla were to go out of business, the service centers will, too. How, then will Tesla cars get needed repairs and maintenance? And what if there's a recall?
"When manufacturers discontinue a brand -- such as Pontiac, Mercury, Oldsmobile or Saturn -- auto dealers still remain to help the customer," the National Automobile Dealers Association said in a statement. That's especially important with cars, the NADA said, because unlike computers and other items, poorly serviced cars become a hazard.
But, if Tesla went under, this would be an issue regardless of who owned the service centers, said Jeremy Anwyl, vice chairman of the automotive Web site Edmunds.com. Even if independent dealers were still in business, it would become difficult, if not impossible, to get parts for the cars and personnel would no longer be getting trained on how to fix the cars.
Tesla did not respond to questions about this issue.
For its part, Tesla worries that traditional franchised dealers, who also have gasoline cars to sell, won't represent its products properly or aggressively enough. Electric cars are new and their benefits require explanation. For car dealers, pressed to make a quick sale, it will be too easy to simply steer customers to gasoline cars rather than bothering to explain the benefits of the Model S, said Diarmuid O'Connell, Tesla's vice president for business development
"My dealers would love to sell this car!" countered Wolters. "It fills a niche we currently don't have."
The Model S is a fairly hot item at the moment, selling well and being lavished with praise by critics. Motor Trend and Automobile magazine named it Car of the Year and Consumer Reports called it the best car they'd ever tested.
Tesla may, in fact, want to use franchised dealers later on, said O'Connell, just not now while the product is still new and not well understood.
"Maybe in the future, when we're selling hundreds of thousands of vehicles," he said.
Until then, said O'Connell, Tesla will sell its cars the way it wants. If some states don't allow that, then Tesla will simply sell them elsewhere.

http://money.cnn.com/2013/05/20/autos/telsa-car-dealers/index.html

This seems like classic rent seeking behavior to me because if the dealers really added value for customers then they wouldn't need legal protection because every manufacturer would use them without the legal mandate. When Dell skipped the middle man and started selling direct to customers they did great because they passed the savings on to customers plus they also had a one price policy while competitors like HP had a confusing pricing system where the price was different at every store. Tesla wants to do the same thing, sell direct to customers and have one low price for everyone without the hassle of people having to negotiate. Customer surveys show that's what people want in a car buying experience yet Texas (and soon NC) have passed laws to outlaw this. It's pretty clear this is just the dealers rent seeking and attempting to prevent themselves from getting cut out of the equation when they can't justify their existence based on simple market factors.

[Wezil]

Encouraging emerging industries which help a global goal, like reducing green house gas emissions, is one thing but not only is it financially impossible to help every industry but that isn't even desirable. It's one thing to nudge and an entirely different one to try to do everything. Even government's powers are limited.

Right. Picking and choosing for political reasons (not economic).

Then you go on...

It's pretty clear this is just the dealers rent seeking and attempting to prevent themselves from getting cut out of the equation when they can't justify their existence based on simple market factors.

Are you listening to yourself?

[DinoDoc]

Are you listening to yourself?

Is this your first time reading his posts?

[Dinner]

You should have government back loans in all industries. Just think about how rocking your economy would be then.

I would very much like to copy Norway's system of the government giving grants to people who want to start their own business. Norway gives grants up to $150,000 (normally it is only a few thousand and it depends on how many would be employed) to assist citizens starting a new small business. They're grants not loans. That is one of the main reasons Norway has the highest small business start up rate per capita in the world and why such a large proportion of the population is self employed.

[regexcellent]

You mean like Solyndra?

[Dinner]

That program has almost a 95% repayment rate so, yes, it's a good program. I however would not make them loans and instead would give grants to people who want to start up new small businesses.

[regexcellent]

I don't think you've realized it but private banks do literally exactly what you're talking about with at zero taxpayer cost in the most economically optimal way.

[Dinner]

Most of them just borrow money from the Fed then relend it. Or at least they do these days. I'd rather cut out the middle man.

[Dinner]

Most of them just borrow money from the Fed then relend it. Or at least they do these days. I'd rather cut out the middle man. Obama resently did this wrt student loans and you should have seen the banking lobbyists cry crocodile tears on TV. The students still got the exact same loans but at lower rates without all the excess fees. Hell, the government was already assuming all the risk and the banks none so why the hell should those parasites get a penny? Cutting out the middle man is almost always a more efficient solution.