Why Not Invest in Tesla?
The “Big Three” automakers of Detroit made an urgent $25 billion appeal to congress. Yet nobody really knows if $25 billion is enough to make them healthy again. With no clear plan a bailout might only delay the inevitable. Alternative: Invest 2% of that amount ($500 million) in Tesla.
Tesla: Innovative Automotive Technology
Tesla has created a working electric car that does 0 to 60 mph in under four seconds. Yes, the car is powered by electricity and the recharging procedure is simple. The Tesla developers were interviewed by 60 Minutes in October 2008 (excerpt below):
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As stated in the video, the first Tesla will hit the market at $109,000. Their second model will be a less expensive electric car, a practical sedan. High sales volume will enable the company to sell at a lower price while still generating handsome profits.
Tesla Needs Help
Tesla needs cash according to Valleywag and The New York Times. Funds will be used to build plants and continue the launch of their product. Raising money in this climate is tough. But since Tesla has a performing product, an investment in the company might make sense. It’s certainly worth looking at since Tesla requires a relatively small amount (compared to $25 billion) to move forward.
More Typewriters, Please!
Author Tom Friedman gave a great metaphor for change on Charlie Rose a few weeks ago. Flashback thirty years to the early days of personal computers. Imagine an big-company exec saying “Don’t tell me about computers! We need more typewriters! We need more carbon paper!”
A bailout for the big three sounds like the automotive equivalent of asking for typewriters and carbon paper. Yes, we need a solid American auto industry for economic and military reasons. But maybe the big three are at the end of their natural life cycle. Maybe it’s time to bet on Tesla, achieve huge returns, and save billions in the process.
Special thanks to Brad Ritchie of Accurate Information Technology for the Tesla investment idea.