Tesla Motors seeks $400 million from potential bailout

November 19, 2008

Reports indicate that the electric vehicle start-up company, Tesla Motors may be looking to get $400 million out of any bailout of the Big 3 automakers.  Despite the incredibly important role electric car manufacturers are going to play in the future of our economy and environment, bailing out Tesla would be a mistake.

The only justification, if there is any, for bailing out Detroit is to prevent our economy from falling into a deep recession.  Under more stable economic times, allowing the Big 3 to use the bankruptcy courts to reorganize, like any other failing business, would be the appropriate action.  (Assuming sufficient government resources were allocated to retraining and assisting unemployed workers.)

However, there is zero indication that a theorized bankruptcy by Tesla would cause serious damage to our economy.  Yes, the development of electric cars is incredibly important to our future growth and the environment.  However, if Tesla fails, the technology and know-how that they have developed will not be lost.  Another entrepreneurial company will come along, scoop up their intellectual and real property, and will either continue moving forward where Tesla left-off, or learn from their mistakes and take a better path.

That is the genius of capitalism and entrepreneurship, and why the Big 3, even if they are “bailed-out” today, will likely be coming back for more in the future.

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