This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Tesla Is Just a Winning Stimulus as Fourth U.S. Automaker Emerges

The question is whether the DOE left big money on the table in its loan to Tesla as some lawmakers try to continue to politicize the government's efforts to grow an electric car market.

The DOE, after all, may lose as much as $217 million on loans to Fisker and Vehicle Production Group. Some political ideologues are likely to try and emphasize those companies' struggles over the success of Tesla in criticizing the electric car and Obama's stimulus efforts.

The government also has been criticized for the backstop of the nation's largest banks and its direct bailout investment in Fannie Mae (FNMA), Freddie Mac (FMCC ), Bank of America (BAC - Get Report), Citigroup (C ) and AIG (AIG - Get Report), in addition to a remaining stake in General Motors (GM - Get Report).

On bank bailouts, Treasury has reported significant profits and it recently booked about $60 billion in revenue from Fannie and Freddie earnings. It remains unclear whether taxpayers will net a direct profit from the government's involvement in the rescue of General Motors.

For now, Musk will breathe a sigh of relief that the company has been extricated with ideological debates that consume Washington. The company's stock and convertible debt offering, in concert with an expiration of low-priced DOE warrants also looks like a particularly shareholder friendly deal.

Over the long-term, however, Tesla's increasingly likely success raises the question of whether government venture financing, particularly at times when capital is in short order, should contain a profit motive.

Warren Buffett of Berkshire Hathaway (BRK.A) surely would never have cut such a feckless warrant contract. At Berkshire's May 4 shareholder meeting, Buffett said the company will be a source of emergency capital in financial panics, as it was during the crisis.

Still, the 'Oracle of Omaha' only recently invested in the resurgent auto industry through a stake in GM shares. Berkshire subsidiary MidAmerican Energy also recently made a flurry of big investments in government financed solar and wind energy developments.

In response to a politically charged question at Berkshire's shareholder meeting, Buffett vigorously defended the government's stimulus efforts.

-- Written by Antoine Gara in New York

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AIG $64.12 0.00%
BAC $17.88 0.00%
F $14.83 0.00%
GM $31.51 0.00%
TSLA $266.15 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs