Scott Woolley has a provocative piece elsewhere in Slate today arguing that Tesla is worse than the bankrupt solar-power startup Solyndra—not as a company, of course, but as an investment by the federal government.
That sounds backwards, since Solyndra defaulted on its $528 million Department of Energy loan while Tesla just paid off all its loans nine years early. Woolley’s counterintuitive argument is that the government actually left more money on the table in the Tesla deal, by failing to demand better terms.
As he points out, Tesla was in tough straits in 2009, trying to raise capital for a car factory in the midst of a credit crisis. Woolley would have had the government play on Tesla’s desperation to demand a share of the company in return for a guaranteed loan. A modest 11-percent share, he notes, would have been worth $1.4 billion to taxpayers today.
The interesting nugget here is that the government actually did negotiate some stock options, but Tesla had the option to void those by repaying the money early. That might help explain Musk’s eagerness to get the loans off Tesla’s books so quickly, a move I had interpreted as sheer bravado.
But in his disappointment about the Department of Energy’s performance as a venture-capital firm, Woolley neglects one detail: The Department of Energy isn’t a venture-capital firm. Its goal in subsidizing renewable-energy technology was not to come away with stock options and turn a profit. The goal was to jumpstart a sector of the economy that holds promise both as a jobs engine and as a way out of the fossil-fuel dependence that threatens our security and our environment. You could argue that a carbon tax would have been a more powerful and efficient way to achieve those ends, but that was politically impossible.
Besides, in 2009 the government was looking to spend money, not make money. Generous loans to promising green-energy startups seemed like a better idea than paying people to dig holes in the ground. And it was. Thanks in part to the subsidies, the United States is now home to the most promising car company on the planet—one whose technology could help the transportation sector kick its oil addiction at last.
The real problem is that Tesla’s cars today aren’t as green as you might think, because so much of the electricity they use comes from coal. Fixing that will require more clean-energy investments, not less. Let’s let the Department of Energy focus on solving our energy problems—a hard enough task without demanding that it come away with windfall profits and stock options to boot.
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