The Business section of the NYTimes.com site has an article about Tesla Motors, the Silicon Valley electric car start-up backed primarily by Elon Musk and a list of other high profile investors (including the Google guys). The article centers around Tesla's recent request for a low interest loan of $400 million from the US Government as part of a fund whose goal is to improve US automakers' fuel efficiency. Randall Stross, the reporter who wrote the article, has a very clear message as it relates to Tesla. His argument is that Tesla is not a truly viable company and that tax payers shouldn't pony up for what he amounts to a boutique automaker that caters to the rich. Tesla is behind schedule on its delivery of the $100K+ Roadster and even farther behind schedule on its plans for the more affordable $60K Model S sedan. However, the bigger question to me, as a tax payer, is whether I think the future of America's auto industry is in the Big Three US automakers or somewhere else... say Silicon Valley?
When our family immigrated to the US in the 70's, the first car we owned was an old Mustang. After a short trist with a VW Beetle and VW Vanagan (they were cheap), we next owned a Buick Skylark Wagon and a Ford Taurus. My first car was a Dodge Colt. From the Taurus my parents went to a Nissan Sentra, then a Honda Accord, and finally a Toyota Camry and Corolla. After my Dodge Colt (I totalled it, but that's another story), my wife and I inherited a Maxima and a Camry. Our first new car purchase ever was a Toyota Prius. I remember the pride my dad had in being able to buy the Taurus which was considered at the time to be one of the better quality cars available. However, since those days of the 80's and early 90's, the quality of American made cars has slowly declined while that of foreign brands from Japan and Europe have continued to increase. It wasn't necessarily for lack of features/power/design but more for lack of reliability that forced us to move away from American made cars to Japanese. Today, American cars have the perception of unreliability, whether true or not. Given the issues that the Big Three face, I don't have much confidence that they'll be able to turn that around nor keep up with innovative companies like Tesla to deliver us the next generation of automobiles. For that reason, I choose to cast my vote with the new unknown than the old unreliable.
UPDATE: Jason Calacanis writes a very good response to Randall Stross' article. It's posted on the Huffington post.