# Is Tesla about to go bankrupt? **URL:** \ **Category:** Great Debates\ **Created:** [March 31, 2018, 9:02pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549 "2018-03-31T21:02:49Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [May 8, 2018, 7:08pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/21 "2018-05-08T19:08:09Z")
> [@WillFarnaby](#): > > It’s a crony-capitalist enterprise Actually, as **Sam Stone** notes, this is precisely the reverse of the truth: > [@Sam\_Stone](#): > > Another serious problem Tesla faces is protectionism. Car Dealers have had decades to form relationships with politicians, and as a result it’s actually illegal in some states to sell new cars direct from the factory. Crony capitalism at the local level may kill Tesla’s business plan even if the quality of the competition isn’t quite good enough on its own. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [May 8, 2018, 9:10pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/22 "2018-05-08T21:10:46Z")
> [@Steve\_MB](#): > > Actually, as **Sam Stone** notes, this is precisely the reverse of the truth: > **[Column: Elon Musk, crony capitalist king](https://www.detroitnews.com/story/opinion/2016/05/09/elon-musk-tesla-crony/84169496/)** > > Tesla could not build a single car without the government’s help “Laws in nine states require each car company selling cars in the state to sell a certain number of “zero emissions” vehicles, else be fined. Since only electric cars qualify under the law as “zero emissions” vehicles — and the majority of cars made by the real car companies are not electric cars — they end up having to “purchase” these “carbon credits” from Tesla, subsidizing Tesla’s operations. The amount Tesla has “earned” this way is in the neighborhood of $517 million. It is estimated that Musk’s various ventures — including his new SolarCity solar panel operation and SpaceX — have cost taxpayers at least $4.9 billion, with Tesla accounting for about half of that dole.” Yes Musk is a marketing wizard on the dole. His fanboys lap it right up because they want to believe a software guy can actually build cool things. He can’t. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [May 8, 2018, 9:55pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/23 "2018-05-08T21:55:47Z")
> [@Sam\_Stone](#): > > Two major problems with Tesla: First, Musk seriously underestimated the difficulty of setting up a production line that can produce high quality cars in large volume. I’ve worked on automobile automobile assembly and automation projects, and the big automakers have decades of proprietary manufacturing data they have used to fine-tune their assembly lines. They also apply the same rigor to suppliers and integrators. Tesla had to stand all that up from scratch. That was always going to be a major source of risk. > > Second, Tesla’s delays and missteps have given the competition time to catch up. When a Tesla could go 300 miles on a charge and the competitors were managing 40-70 miles, they had a massive advantage. That’s the difference between a usable car and one that gives you constant range anxiety. But now the other auto makers have stepped up their electric game. > > A Tesla vs a first gen electric from other automakers was a slam-dunk for Tesla. A Model 3 vs a Chevy Bolt or a Ford Focus electric is a much closer proposition. The Bolt has a 238 mile range. The Focus has 115, but the Focus also has Tesla-like fast charging and only costs $29,995, before tax incentives. With the Federal tax incentives, you can get i to an all-electric car with dcent range for just over $20,000. > > Given that Tesla is also at a disadvantage in terms of service networks, aftermarket support and the like, its cars have to be substantially better than the alternatives from traditional manufacturers. I’m not sure that’s the case any more. And it certainly won’t be if they can’t deliver the model 3 soon in quantity with high quality. > > Another serious problem Tesla faces is protectionism. Car Dealers have had decades to form relationships with politicians, and as a result it’s actually illegal in some states to sell new cars direct from the factory. Crony capitalism at the local level may kill Tesla’s business plan even if the quality of the competition isn’t quite good enough on its own. > > I would not be investing in Tesla stock right now. Didn’t Tesla also make their patents on their battery technology public so anyone could use them? That is good for the environment, but as you said other manufacturers have deeper pockets and already have the equipment to build electric cars. Even if Tesla fails, it helped usher in the age of electric cars. So it wasn’t a true failure. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [May 8, 2018, 10:17pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/24 "2018-05-08T22:17:12Z")
> [@WillFarnaby](#): > > [Column: Elon Musk, crony capitalist king](https://www.google.com/amp/s/amp.detroitnews.com/amp/84169496) > > “Laws in nine states require each car company selling cars in the state to sell a certain number of “zero emissions” vehicles, else be fined. Since only electric cars qualify under the law as “zero emissions” vehicles — and the majority of cars made by the real car companies are not electric cars — they end up having to “purchase” these “carbon credits” from Tesla, subsidizing Tesla’s operations. > > The amount Tesla has “earned” this way is in the neighborhood of $517 million. > > It is estimated that Musk’s various ventures — including his new SolarCity solar panel operation and SpaceX — have cost taxpayers at least $4.9 billion, with Tesla accounting for about half of that dole.” > > Yes Musk is a marketing wizard on the dole. His fanboys lap it right up because they want to believe a software guy can actually build cool things. He can’t. I totally agree about Tesla and Solar City. SpaceX is completely different. Its initial financing came right out of Musk’s pocket and almost bankrupted him. And the money it has gotten from NASA have not been subsidies, but fees for service - at prices much lower than the traditional industry players. And I’d say that Musk has built some really cool things. Watching two boosters re-land at the Cape after launching a car to the asteroid belt was one of the coolest things I have seen. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [May 8, 2018, 10:18pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/25 "2018-05-08T22:18:19Z")
> [@Wesley\_Clark](#): > > Didn’t Tesla also make their patents on their battery technology public so anyone could use them? That is good for the environment, but as you said other manufacturers have deeper pockets and already have the equipment to build electric cars. > > Even if Tesla fails, it helped usher in the age of electric cars. So it wasn’t a true failure. Well, not if you are a shareholder or the owner of a current Tesla vehicle. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [May 8, 2018, 10:24pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/26 "2018-05-08T22:24:22Z")
> [@WillFarnaby](#): > > “Laws in nine states require each car company selling cars in the state to sell a certain number of “zero emissions” vehicles, else be fined. Since only electric cars qualify under the law as “zero emissions” vehicles — and the majority of cars made by the real car companies are not electric cars — they end up having to “purchase” these “carbon credits” from Tesla, subsidizing Tesla’s operations. > > The amount Tesla has “earned” this way is in the neighborhood of $517 million. I think it’s deeply flawed to claim that these are not real earnings. What _should_ be happening is that gasoline should be taxed hundreds of percent to reflect its massive cost to society in environmental damage. This would create a straightforward and transparent economic incentive for the free market to commit capital to R&D to solve the problem of finding alternatives to oil. By far the greatest “crony capitalism” in the U.S. is this lack of taxation of oil & gasoline, effectively a massive subsidy to the oil industry. It’s overwhelmingly the oil companies that are the beneficiaries of crony capitalism, not the likes of Tesla. Things like these carbon credits are a workaround to give some help to alternative energy companies that are trying to compete in a market that is heavily skewed against them by the fact that we don’t charge consumers for the true cost of the gasoline that they use to fuel their conventional vehicles. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [May 9, 2018, 1:16am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/27 "2018-05-09T01:16:07Z")
> [@Riemann](#): > > I think it’s deeply flawed to claim that these are not real earnings. > > What _should_ be happening is that gasoline should be taxed hundreds of percent to reflect its massive cost to society in environmental damage. This would create a straightforward and transparent economic incentive for the free market to commit capital to R&D to solve the problem of finding alternatives to oil. > > By far the greatest “crony capitalism” in the U.S. is this lack of taxation of oil & gasoline, effectively a massive subsidy to the oil industry. It’s overwhelmingly the oil companies that are the beneficiaries of crony capitalism, not the likes of Tesla. Things like these carbon credits are a workaround to give some help to alternative energy companies that are trying to compete in a market that is heavily skewed against them by the fact that we don’t charge consumers for the true cost of the gasoline that they use to fuel their conventional vehicles. I agree the oil companies benefit from crony capitalism. The government keeps competitors from drilling while they disrupt the steady flow of oil from the Middle East by reckless intervention. This drives prices higher for the benefit of domestic producers. The biggest perennial subsidy to the oil companies began many years ago when the government built the interstates, undermining any chance of sustainable urban growth with private mass transit systems and enabling urban sprawl that makes the automobile the default mode of transport in the US. Yes the interstate system is perhaps the most obvious government distortion of markets after the Fed and public schools. That said, the idea that anything is skewed against the crony renewable industry is silly. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [May 9, 2018, 3:23am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/28 "2018-05-09T03:23:04Z")
> [@Sam\_Stone](#): > > Well, not if you are a shareholder or the owner of a current Tesla vehicle. True but if the underlying goal of Tesla was to create a market for electric cars to reduce the damage from climate change, I’d say they’ve done a good job. They have created a marketplace for them and now many big automakers are building electric cars. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [May 9, 2018, 10:27am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/29 "2018-05-09T10:27:00Z")
> [@WillFarnaby](#): > > [Column: Elon Musk, crony capitalist king](https://www.google.com/amp/s/amp.detroitnews.com/amp/84169496) > > “Laws in nine states require each car company selling cars in the state to sell a certain number of “zero emissions” vehicles, else be fined. Since only electric cars qualify under the law as “zero emissions” vehicles — and the majority of cars made by the real car companies are not electric cars — they end up having to “purchase” these “carbon credits” from Tesla, subsidizing Tesla’s operations. Not seeing the problem. You can either refrain from creating an externality cost (the Tesla case) or you can create an externality cost and pay the bill for it (the other companies). This is the most free-market solution available for solving the externality problem (as opposed to, say, outright prohibiting externalites above X threshold). In any case, do you have anything to say that is actually relevant to the dealer protectionism racket? ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [May 9, 2018, 10:47am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/30 "2018-05-09T10:47:17Z")
> [@Wesley\_Clark](#): > > True but if the underlying goal of Tesla was to create a market for electric cars to reduce the damage from climate change, I’d say they’ve done a good job. They have created a marketplace for them and now many big automakers are building electric cars. But it is possible to have one’s cake and eat it too. Tesla could be a game-changing company that is also well run and selling a product that is better than what it offers today. It’s quite reasonable to expect Tesla to do both. ---
**Author:** ![Bullitt](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bullitt/32/5725_2.png) [@Bullitt](https://boards.straightdope.com/u/Bullitt)\ **Post date:** [May 9, 2018, 11:44am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/31 "2018-05-09T11:44:59Z")
But the company has never, ever been profitable. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [May 9, 2018, 1:41pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/32 "2018-05-09T13:41:11Z")
> [@Bullitt](#): > > But the company has never, ever been profitable. But if profitability were the main goal of Tesla, I think it is clear that their path to selling an affordable EV would be taking much longer than has. I think the real problem is the continual misleading of investors about the company’s actions, rather than the lack of profitability in and of itself. ---
**Author:** ![Fiveyearlurker](https://avatars.discourse-cdn.com/v4/letter/f/da6949/32.png) [@Fiveyearlurker](https://boards.straightdope.com/u/Fiveyearlurker)\ **Post date:** [May 9, 2018, 1:46pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/33 "2018-05-09T13:46:21Z")
I know that I put a deposit on a Tesla roof on the day that they started accepting them, and every few months I check in and am told that they are a few months away. I’m due for my “few months away” call come to think of it. ---
**Author:** ![Bullitt](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bullitt/32/5725_2.png) [@Bullitt](https://boards.straightdope.com/u/Bullitt)\ **Post date:** [May 9, 2018, 2:06pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/34 "2018-05-09T14:06:43Z")
Tesla has a long way to go, to being an efficient car manufacturer, a profitable company, and a trustworthy company to investors and the public. > [@eschereal](#): > > [this cannot have helped](https://arstechnica.com/cars/2018/03/tesla-says-autopilot-was-active-during-fatal-crash-in-mountain-view/) I drove by that wreck on my commute that day, from 85 NB to 101 NB. It was not a pretty sight. ---
**Author:** ![Bullitt](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bullitt/32/5725_2.png) [@Bullitt](https://boards.straightdope.com/u/Bullitt)\ **Post date:** [May 9, 2018, 2:12pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/35 "2018-05-09T14:12:05Z")
(I was on 85 NB going to 101 NB) ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [June 27, 2018, 2:48am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/36 "2018-06-27T02:48:41Z")
[https://www.bloomberg.com/news/articles/2018-06-25/the-future-of-tesla-hinges-on-this-gigantic-tent](https://www.bloomberg.com/news/articles/2018-06-25/the-future-of-tesla-hinges-on-this-gigantic-tent) The Space Cadet is building cars in a tent. Death throes. ---
**Author:** ![Defensive\_Indifference](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/defensive_indifference/32/6502_2.png) [@Defensive\_Indifference](https://boards.straightdope.com/u/Defensive_Indifference)\ **Post date:** [June 27, 2018, 3:45am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/37 "2018-06-27T03:45:47Z")
When I was doing my MBA in 2007-2008, I wrote a paper predicting Tesla would fold by (IIRC) 2012. I thought that the Model S was going to be their attempt at a mass market vehicle, which they wouldn’t be able to sustain. I thought cheaper, “green enough” cars like the Chevy Volt would take away too many buyers, and Tesla would struggle to ramp up production. I wonder if I still have a copy of that paper somewhere. IIRC, I was right about some things, premature in others. I didn’t predict the influx of other electrics and plug in hybrids in the past few years. Anyway, Musk seems like a bit of a loon. And it sounds like the challenges of mass production have hit him hard. Still, I’m disappointed. I had hoped a premium all-electric brand would drive demand and innovation. Chevy has said they’re going all-in on electrics and plug ins, and hopefully they’ll continue down that path after Tesla implodes. Ford is abandoning the car market, though, so without much domestic competition, Chevy may slide back into the comfort of ICE cars. I love my Chevy Bolt. When the lease is up in two years, I really hope I have more options to choose from ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [June 27, 2018, 3:55am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/38 "2018-06-27T03:55:56Z")
I am torn. I admire Elon Musk’s obvious genius, but it’s beginning to seem as if he might be the male version of Elizabeth Holmes. I think he’d be better off just saying ‘fuck vehicles, build home batteries’. Oh well…at least he can build rockets. ---
**Author:** ![Quartz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quartz/32/267_2.png) [@Quartz](https://boards.straightdope.com/u/Quartz)\ **Post date:** [June 27, 2018, 10:03am UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/39 "2018-06-27T10:03:29Z")
> [@WillFarnaby](#): > > [https://www.bloomberg.com/news/articles/2018-06-25/the-future-of-tesla-hinges-on-this-gigantic-tent](https://www.bloomberg.com/news/articles/2018-06-25/the-future-of-tesla-hinges-on-this-gigantic-tent) > > The Space Cadet is building cars in a tent. Death throes. It worked for the Germans in WW2. Oh wait… 🙂 ---
**Author:** ![voltaire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voltaire/32/313_2.png) [@voltaire](https://boards.straightdope.com/u/voltaire)\ **Post date:** [June 27, 2018, 1:28pm UTC](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549/40 "2018-06-27T13:28:48Z")
> [@voltaire](#): > > Nah, all Musk need do is announce a new Tesla motorcycle that looks like a Tron bike and people will be lining up to buy Tesla stock and to put a deposit on the bike years ahead of the release date. I thought this thread was bumped to point out my above prediction was wrong. It’s not a bike, [it’s a pickup.](https://electrek.co/2018/06/27/tesla-pickup-truck-everything-we-know/) [Previous page](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549.md?page=1) [Next page](https://boards.straightdope.com/t/is-tesla-about-to-go-bankrupt/811549.md?page=3)