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Tesla needs aid for new electric sedan

By Kristina Loew, Newser User

Posted Jan 17, 2009 1:42 PM CST

(Newser) – Small upstart Tesla wants to build on the success of its bold electric sports car—the pricey Roadster—by building a tamer sedan for the masses. But to do so, it needs a big infusion of cash from the Obama administration, which is looking to boost clean energy. The situation, notes Devid Welch in BusinessWeek, poses a tricky question for Obama: Are taxpayer dollars best spent on “small startups or big but troubled players inlcuding General Motors and Ford?"

Tesla says it needs $450 million from the Energy Department to put its $50,000 sedan on the road by 2011. To qualify, it must raise millions in matching funds and prove the car is viable. With the Chevy Volt hot on its heels, policymakers will have to decide whether Tesla can survive in a cutthroat market. "Big parts makers typically won't even look at a car that doesn't sell in the tens of thousands," says Welch. So even if Tesla gets aid, the rest of the industry may be leery.

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Tesla workers assembly a Tesla Roadster at their showroom in Menlo Park, Calif., Tuesday, Sept. 16, 2008. (AP Photo/Paul Sakuma)

The front of a Tesla Roadster is shown at their showroom in Menlo Park, Calif., Tuesday, Sept. 16, 2008. Tesla's cars run on a massive lithium-ion battery pack that can be recharged. (AP Photo/Paul Sakuma)

The Tesla Roadster electric car sits in a showroom during an event to celebrate the opening of the first Tesla Flagship Store, Thursday, May 1, 2008, in Los Angeles. (AP Photo/Mark J. Terrill)

General Motors Corp. CEO Rick Wagoner introduces the Chevrolet Volt battery pack at the North American International Auto Show Monday, Jan. 12, 2009, in Detroit. (AP Photo/Jerry S. Mendoza)

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There's a lot more risk for the government with an unknown quantity. [Tesla lacks] the global sales of mass-market players.
- Michael Robinet, vice-president of auto consulting firm CSM Worldwide

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US Choice: Put Money in Startups or Big Three