The Holy Grail is not golden…

…it’s GREEN.

Maybe this is a good thing –Tesla motors scores $465M loan for new vehicle line. Or maybe not – I’m not sure at this point.

According to the article Tesla will introduce their Model S electric sedan that will sell for $57,500. With a taxpayer subsidy of $7,500 (remember the free golf carts?) that will bring the cost down to just $50K. Certainly not something the average Joe (or an average Mook) will be rushing out to buy but far cheaper than their current model which sells for over $100K. This is also dependent on the announced price not going higher – like their current model’s announced price did. Remember – this loan is from the government (taxpayers) and so is the subsidy so we’re on the hook for this little electric wonder.

I’m not a mathematician or economist but I can do a little math here. Let’s take a look:

  • Taxpayer loan = $465,000,000 (details unknown)
  • Model S selling price = $57,500 (est.)
  • Taxpayer subsidy = $7,500/vehicle

Admittedly, we don’t know the terms of the loan or how much Tesla hopes to make on each vehicle. These are important details but, for argument sake, we’ll make some assumptions.

One thing we do know is that whatever Tesla’s profit is, they’re not going to return all of it to satisfy the loan. Being the generous Mook that I am, I’ll assume that Tesla makes 30% on each vehicle sold. This is wildly optimistic but I’m in a generous mood. Therefore Tesla will net:

$57,500 X 30% = $17,250 per vehicle

So again, being generous and giving Tesla credit for wanting to pay off the taxpayers in a timely fashion, let’s say they return 25% of their net ($4,312.50/vehicle) to pay off the loan. That means that they will have to sell:

$465,000,000/$4,312.50 = 107,826 vehicles

If Tesla does manage to sell that many vehicles we (taxpayers) are on the hook for an additional amount of:

$7,500 (subsidy) X 107,826 vehicles = $808,695,000

While Tesla may pay back the loan with a little interest, we’re stuck with over $800M paid out to people who can afford a $50K car in the first place. Nice…

So, for our investment of $465M, we get to pay $800M and Tesla pockets the rest – that’s a great deal for Tesla. I could almost live with the $465M loan part but having to pay another $800M for the sake of the green Holy Grail is not such a good deal…

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One Response to “The Holy Grail is not golden…”

  1. […] bilge on this gargantuan hoax. “Green” businesses like GE and Government Motors and Tesla continue to get massive taxpayer cash infusions. Wind turbines stop working in the cold Minnesota […]

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