Making a Tesla

JP2UhEz.jpgOn West Coast, we are proud of being an environmentalist. We recycle, bicycle and use public transit. There are even more plug-in electric cars on the roads. Tesla S, an all-electric sport sedan, starts as low as $70,000 and average about $100,000. With imagine of speed and environment-friendly, Tesla became a phenomenon on the market in recent years even at such high price.

However, Elon Musk, the CEO of Tesla Motors, was criticized for getting government subsidies. An estimated amount 4.9 Billion dollar of government support has been distributed to benefit Musk’s Tesla Motor, SolarCity and Space X in past couple years. This subsidies includes grants, long term government loan with low interest, $7,500 federal tax credit (an additional $2,500 rebate in California) per car and more.  Even with help from federal government, Tesla Motor is still losing $4,000 on every car it sells.

It is difficult to calculate the accurate cost of a Tesla vehicle without government support, but it is likely fewer people would choose to buy Tesla and the company has already gone out of business. Is it what we want?

New technologies are costly and unpredictable. An innovated private company, such as tesla, could hardly survive on competitive market. Vehicle customers would prefer to buy a $50,000 gas-powered one than $ 150,000 priced electric car if they perform similarly.

In The Carbon Efficient City, authors suggest “Subsidies of new technologies such as wind may be helpful in the short term but in all likelihood would be unnecessary if the playing field were leveled for new wind projects developed by utilities or by practically enabling distributed generation”. In our Tesla case, government subsidies is major reason people are buying electric cars, and it would be true in the future until current technology evolve to be efficient.

If government are too conservative to spend in innovation, then the society would not move forward.

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