After the big three Detroit auto makers essentially had their rear-ends handed to them in a bag by Washington politicians last week, they have been scrambling to find ways to get the money they feel they need to stay alive — and their proposed solutions are making Tesla cringe.
Last year, when the US congress passed the Energy Independence and Security Act (EISA), a $25 billion fund called the “Advanced Technology Vehicle Manufacturing Incentive Program” (ATVM) was established to help new and existing auto makers re-tool their operations to bring next generation car technologies to market quickly. Just this month, the program started accepting applications for funds from interested parties.
But in all the hubbub surrounding the downfall of the established American auto manufacturers, one of the ideas apparently being floated by the CEOs of GM, Ford and Chrysler is to convert some or all of that $25 billion into what amounts to a bailout.
Needless to say, car makers like Tesla aren’t happy about this strategy. Tesla has applied for funding from the ATVM to undertake two projects — an Advanced Battery and Powertrain Manufacturing facility and a manufacturing facility to build their upcoming five-passenger electric sedan known as the “Model S.”
So, in a Thanksgiving blog post, Diarmuid O’Connell, Tesla Motors’ Vice President of Business Development, categorically outlines how shifting any of the ATVM $25 billion into a bailout “would be an enormous mistake,” adding that “the original spirit and intent of the program is critical for the nation’s economic security – and the importance of the program is even greater given the harrowing economic climate.”
I happen to fully agree with Tesla on this one. That money is intended to rectify the problems that got the big three into trouble in the first place — that being their lack of foresight and desire for change. As New York Times contributor Micheline Maynard has said, “Detroit [has] proved yet again that it [has] not understood the psyche of American consumers.”
In other words, Detroit missed the boat and made a fatal strategic calculation that people would continue to buy larger and larger cars without nary a second thought. Does that mean we shouldn’t bail them out at all? Maybe so, maybe not… I’m still not convinced we shouldn’t save the big three in some form.
As Mitch Albom said in a Detroit Free Press article last week, if we let the big three die we let our “national spine collapse. America can’t be a country of lawyers and financial analysts. We have to manufacture. We need that infrastructure. We need those jobs. We need that security. Have [we] forgotten who built equipment during the world wars?”
Nonetheless, I don’t think the ATVM money should be used for anything other than bringing our car technologies into this century. So on this point Tesla is right. I take it a step further though and say that perhaps we do need to save Detroit, but we need to do it in a way that doesn’t penalize the car companies that have been doing it right.
Image Credit: Tesla Motors