BusinessWeek Asks Is Tesla a Good Bet for Taxpayer Dollars?

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Detroit January 19, 2009; David Welch writing for BusinessWeek reported that Tesla Motors has defied skeptics by delivering an electric sports car many said would never see a showroom. But to develop a sedan with broader appeal and get a battery plant up and running, Tesla says, it needs $450 million in loans from the Obama Administration. That raises a thorny question: Are taxpayer dollars earmarked for green technology best gambled on small startups such as Tesla or big but troubled players including General Motors and Ford?

Tesla deserves some credit. The Silicon Valley upstart has raised some $195 million in capital—albeit more than a third of it from Chairman and CEO Elon Musk—and has built the first car that runs on cutting-edge lithium ion batteries. Technologically, Tesla's Roadster is a winner. It travels 240 miles on a charge before it needs to plug in—more than twice as far as BMW's soon-to-debut Mini E. After initially losing $40,000 apiece on the sports car, Musk says he's now making money on each Roadster.

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