Which was not at all certain to anyone including Elon, when Daimler made that loan. In fact the odds were so much stacked against them, it was a bold risky investment. Kudos to Daimler
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Tesla name drop in the State of the Union speech!
- Thread starter gg_got_a_tesla
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Which was not at all certain to anyone including Elon, when Daimler made that loan. In fact the odds were so much stacked against them, it was a bold risky investment. Kudos to Daimler
NigelM
Recovering Member
I don't think it was that risky, remember they also established a right of first refusal in the case of a sale (even in bankruptcy) so in a worst case scenario they would have acquired all the know-how at a reasonable price.
But we're getting off topic now....
Krugerrand
Meow
Calculated risk perhaps, but I can't see how you could call it anything but risky - very risky. If it was an easy choice to make, then people/companies would have been lined up to give Tesla the money. They weren't.
On topic, I smiled a little when The President mentioned Tesla.
I still wonder if Daimler has some secret regrets about keeping Tesla afloat. Sure, they made a ton of money in the short-term when they sold their stake but, they've surely lost potentially thousands of S-Class / E-Class sales already to the Model S, very soon thousands of SUV sales to the Model X and eventually, (tens of) thousands of C-Class / E-Class sales to the Model 3.
Back on-topic, yes, it was great to see the mention. However, not entirely sure if a lot of folks paid attention to the SOTU speech to begin with, particularly from a President in his last couple of years in office with a Congress that's on the other side of the fence (effectively implying legislative gridlock). I've not heard any of my coworkers or anyone else (who knows I have a Tesla) walk up to me and say that they heard the name drop.
Back on-topic, yes, it was great to see the mention. However, not entirely sure if a lot of folks paid attention to the SOTU speech to begin with, particularly from a President in his last couple of years in office with a Congress that's on the other side of the fence (effectively implying legislative gridlock). I've not heard any of my coworkers or anyone else (who knows I have a Tesla) walk up to me and say that they heard the name drop.
Canuck
Well-Known Member
Change what story? The question is what would have happened to Tesla if the government didn't provide the loan? Do you know? I don't and if you say you do, that's fine but I don't agree that anyone knows.
Right. And he said he expected Tesla to fail...
"Well, I didn't really think Tesla would be successful," Musk said. "I thought we would most likely fail. But I thought that we at least could address the false perception that people have that an electric car had to be ugly and slow and boring like a golf cart."
Why Elon Musk Thought Tesla Would Fail - TheStreet
People feel very passionately about politics. It seems that our inner wiring determines our political views and leanings. These may be set and very difficult (perhaps impossible) to change through discussions on internet forums.
From that angle, moderators decision to snip out political discussions seems a wise one.
I have my own political leanings and inclinations, which I am not interested in sharing here as such sharing would be totally futile.
The first thing that I learned about share markets is that the markets are inseparable from the politics. Politics is one of the major inputs into developing macroeconomic climate in any given country.
Investor that does not closely follow political developments and trends is like a sailor that does not keep watch out on the horizon to check for coming storms.
From that angle, investment discussions that do not allow political discussions are crippled.
My take on US government role in Tesla's success is that the current US government achieved a major turnaround in US economic climate. The role of the loan was minor in comparison to the role that the economic turnaround played in enabling Tesla's and other businesses success.
Graphs below show the trend in unemployment in US under the last two administrations
and comparative debt of the last crisis and post recovery under current administration.
Such climate was critical in enabling the sales of unproven, untested technology to thousands of people.
Tesla name drop may seem insignificant in the presidential address, but it does reflect on where both Tesla as a business and US as a country currently stand on the world stage.
Currently, US economic engine seems to be very lonely in where it is, pulling forward, against the prevailing world economic climate.
Tesla is even more lonely in pulling towards a different future, against the entrenched car makers.
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Krugerrand
Meow
I know what Elon Musk said on the topic and I'm more than happy to take his word for it - since he was there and all.
What does that have to do with whose money saved Tesla? Elon Musk is extremely pragmatic thus his 'failure statement'. AND he has no reason to state the history of Daimler's money or the DOA money in relation to Tesla. I'm not understanding what the difficulty is in understanding what he said about those two chunks of money. Daimler money saved Tesla from bankruptcy. DOA money allowed Tesla to accelerate their plans. That's what he has said in numerous interviews.
This is almost as silly as Elon repeating in every ER call: "We are production constrained, NOT demand constrained." Followed up the next day, weeks and months by media, SA authors and the like saying: "Demand for the Model S has peaked." I mean, really.
Canuck
Well-Known Member
“We were saved by Daimler,” Musk said, adding that Daimler’s$50 million, 9 percent ownership of Tesla was enough to help the company stage a successful initial public offering without the DoE’s help. Technically, Musk is correct. Without the investment from Daimler, the DoE loan guarantees would never have been given to Tesla. In reality however, the DoE loans enabled Tesla to do much more than the Daimler investment did.
Not to be ungrateful for the $465 million of tax-payers’ money, Musk was sure to add “The DOE was a helpful catalyst,” and that without it, Tesla’s IPO “wouldn’t have been as good.”
Elon Musk: Daimler Saved Tesla, DoE Loans A Bad Idea
My Emphasis.
But the point is that we DO know what would have happened if Daimler didn't invest: there would have been no Tesla to receive the loan! It was that close.
Krugerrand
Meow
Canuck, how is what you just quoted Elon Musk as saying any different than what I've said all along? It's not different.
Daimler's investment saved Tesla from bankruptcy ('We were saved by Daimler.'), and the DOE loan accelerated Tesla's progress ('The DOE was a helpful catalyst.').
Daimler's investment saved Tesla from bankruptcy ('We were saved by Daimler.'), and the DOE loan accelerated Tesla's progress ('The DOE was a helpful catalyst.').
Canuck
Well-Known Member
I don't know. I'm not disagreeing with you. Perhaps I'm proving your point? I'm just stating that "on May 19, 2009, Germany's Daimler AG, maker of Mercedes-Benz, acquired an equity stake of less than 10% of Tesla for a reported US$50 million." Then, only one month later, in "June 2009 Tesla was approved to receive US$465 million in interest-bearing loans from the United States Department of Energy." So perhaps the Daimler loan was made with the knowledge that the government loan had/would be/most likely approved? In other words, it seems to me that the government loan was more responsible for keeping Tesla solvent than the Daimler purchase. It was nearly 10 times as much. I was just giving the Obama administration credit for it. I have no idea what would have happened to Tesla had if it not been made. I think you are saying the Daimler loan is more responsible for saving Tesla but if it was predicated on the government loan, then what is more responsible for saving Tesla? I don't think Elon wants to admit it.
Than again I may be wrong. It won't be the first time. I said Tesla wouldn't raise prices as a result of the falling Canadian dollar and today they did. So much for what I know!
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Before a $50M purchase is made, due diligence is done, and conditions that are likely to come about are taken into account. So, while I don't disagree with what you say, perhaps if the government wasn't about to make that loan, then Daimler would not have made that purchase? Assuming that's true (and published articles say it is -- see my previous post) what is more responsible for keeping Tesla solvent -- the Daimler purchase or government loan?
callmesam
Member
How about damning with faint praise. Politico decided to write a piece showing how the President had named big donors in his speech.
Companies mentioned by Obama are big D.C. spenders
"Tesla: The electric car company does not have a political action committee to make contributions. It is registered to lobby but spent less than $5,000 in each quarter in 2014."
Companies mentioned by Obama are big D.C. spenders
"Tesla: The electric car company does not have a political action committee to make contributions. It is registered to lobby but spent less than $5,000 in each quarter in 2014."
From all I've read, if the Daimler loan hadn't happened, there would be zero chance of the government loan. Once the Daimler loan went through, the government loan was then approved. That both happened caused the IPO to be [more] successful. My speculation is that if only the Daimler loan had gone through, we'd still be waiting to purchase our Model S cars.
Well clearly Tesla is not an example of a "big donor" to Democrats. Ebay, Facebook, and CVS gave roughly equal amounts to both parties and UPS gave primarily to Repbulicans. Google gave primarily to Democrats.
So it appears that Obama did not use political criteria when deciding which companies to name in his SOTU speech. He mentioned several very large companies, which unsurprisingly make political donations. No news there.
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callmesam
Member
Canuck
Well-Known Member
Responding to the point above I placed in bold, I disagree. The President mentioned Tesla right after the "booming" American auto industry. Romney was against the auto bailout and Tesla loan so I think it was extremely political in choosing Tesla to be included in the speech. Ebay and Google were thrown in because they were needed to made the point about jobs not being available 10 years ago, since they needed to figure out a way to get Tesla into the speech. Nearly every word of these speeches are highly political and much attention is given to every detail when it comes to choosing what to include in the speech.
meh. So any mention of any company by a politician means the company is politicized? Seems like a pretty low bar. Just cus Romney was ignorant in dumping Tesla in with Solyndra, doesn't mean Obama mentioning Tesla means he's trying to reference something Romney said over 2 years ago. Tesla has grown a lot since then, they're doing something nobody else is, and they deserved that mention in the SOTU.
Canuck
Well-Known Member
No, sometimes mention of a company name is needed as filler for the political point being made such as Ebay and Google. If you read the speech Tesla was the next sentence after the auto industry, and a connection needed to be made, hence Ebay and Google:
"Since 2010, America has put more people back to work than Europe, Japan, and all advanced economies combined. Our manufacturers have added almost 800,000 new jobs. Some of our bedrock sectors, like our auto industry, are booming. But there are also millions of Americans who work in jobs that didn't even exist ten or twenty years ago -- jobs at companies like Google, and eBay, and Tesla."
Here's why that part of his speech is so important economically (and hence politically):
"This year’s State of the Union address is likely to signal the direction Obama plans to take in his last two years in office. That seems to be to aggressively promote US auto manufacturing.
In a speech he made January 7 at Ford’s Michigan assembly plant, Obama said manufacturing was leading the way in job creation in America, and called the auto industry the “heartbeat of American manufacturing.”
The president made similar remarks in October at Millennium Steel, in Princeton, Indiana.
“About 10, 15 years ago, everybody said American manufacturing is going downhill, everything is moving to China or other countries,” he said, adding that the sector had benefitted from increased investment into new technology and plants, and new training opportunities for workers. “What we’ve now seen is manufacturing driving economic growth in a way we haven’t seen in about 20-25 years.”
A report released last summer by the US Department of Commerce’s economics and statistics administration supports the president’s claim."
Obama's State of the Union: watch for more focus on the auto industry | Business | The Guardian
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