What's the "long term view" on Tesla? What's the benefit of them selling electric cars vs. Toyota or GM? The latter have clearly shown their capability to do so. Tesla just thinks a different approach to the market is superior. They'll be proven right or wrong in the next few years. That's well within the time horizon for an investor to make a reasonable decision: Who's more likely to make a profit with their electric car plans? Toyota, GM or Tesla? This is the kind of thing markets are good at. If the government wants more electric cars, just subsidize everyone's cars (which they're doing, of course). Don't try to be a super-VC.
I'd say partially it's new and sexy, but I imagine the suggested long term is it could help show America as a leader in green tech which should help attract outside investment into other green tech ventures, helping to kickstart a new economic driver.
What Tesla is doing is creating an entire new venture from scratch from nothing, for them to hit profitability and make any solid return is likely to take a decade. VCs are unlikely to dump $500m for a 10 year wait, sure they'll know within a few years whether it was a good investment, but it's not likely to be viewed as a safe bet.
So the difference in "sexy" between Ford making a few hundred thousand electric cars and Tesla making a few hundred thousand electric cars is worth risking half a billion dollars of the taxpayers' money?
Note, not American so my interest in American tax dollars is pretty slim. But, in general yes it's worth the risk.
America, like most countries, is looking for a new industry to keep the economy moving on up. Manufacturing used to do it, then that shifted away, then the financial sector was the keeping the economy ticking over and that went a bit awry, now there needs to be a next thing. Investing in Tesla is a chancy risk (although I imagine the US.gov has taken steps to minimise the risk), but if it pays off and helps develop a new economic motivation industry with green tech it could help as a job creation strategy and also attract investment from outside the country.
Tesla looks and sounds sexy, they're a new darling with no baggage, they've got this guy involved who's daring and reasonably well liked with huge ideas, the cars themselves are gorgeous. That's much more exciting than Ford making electric cars.
$500m sounds like a hell of a lot of money when it's out there, but the US spent $700b on the military in 2011. Compared to that $500m on Tesla is not a huge amount. Without being glib, $500m is a rounding error on the military spend, if Tesla strapped some rockets and bullet proofing it could slip into the budget.
Ford did not receive any "bailout" funds, either as equity or debt.
"As the only one of the U.S. Big Three that didn't accept the offer of a federal-government bailout in 2009, Ford [relied] instead on its own huge bet on its future financed by private capital and led by CEO Alan Mulally"
I'm confused by the criteria described at the bottom of the page:
In order to be financially eligible for an ATVM loan, an applicant must be financially viable without the receipt of additional federal funding for the proposed project.
Would Tesla really have been financially viable without this loan?
